South Africa-Business-Investment

S/Africa: World capital markets benefit from $5b gov’t investment

APA-Pretoria (South Africa)

Two US$5 billion tranches in National Treasury bonds that will mature in 2029 and 2049 have been invested in world capital markets by the South African government, APA learnt on Tuesday.

According to the National Treasury, the $2 billion bonds will mature in a decade, while the $3 billion bonds will mature in 30 years. The bonds were placed in the international capital markets on 23 September 2019.

“Due to favourable pricing and a sizeable order book, the Republic was able to prefund an additional US$1 billion over the planned US$4 billion.

“Prefunding is the early issuance of an amount planned to be issued in future years. This is done to take advantage of good pricing and favourable market conditions, while reducing future borrowing need,” National Treasury said on Tuesday.

According to the Treasury, the 10-year bond is priced at a coupon rate and re-offer yield of 4.85%, which represents a spread of 313 basis points above the 10-year US Treasury benchmark bond.

“The 30-year bond, priced at a coupon rate and re-offer yield of 5.75%, represents a spread of 358.6 basis points above the 30-year US Treasury benchmark bond,” National Treasury said in a statement.

The National Treasury added that the transaction was 2.71 oversubscribed, with investor demand across Europe, North America, Asia, South America, Middle East, Africa and others.

In terms of investor type, demand was supported by a mixture of fund managers, insurance and pension funds, financial institutions, hedge funds and others, it noted, adding that government viewed the success of the transaction as an expression of investor confidence in the country’s sound macro-economic policy framework and prudent fiscal management.


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