Republic of South Africa issues two new bonds in the international capital markets
The Republic of South Africa has successfully placed US$3 billion in bonds maturing in 2032 (10-year) and 2052 (30-year) in the international capital markets on 11 April 2022, with US$1.4 billion and US$1.6 billion placed in the 2032 and 2052 tranches respectively.
The 2022 Budget Review made provision for US$3 billion equivalent to be raised in the international capital markets in 2021/22 to fund government’s foreign currency commitments. Given the volatility in the market over the period, the decision to raise the foreign currency was delayed in accessing the market in a more constructive issuance window.
The 10-year bond priced at a coupon and re-offer yield of 5.875 per cent, which represents a spread of 309 basis points above the 10-year US Treasury benchmark bond. The 30-year bond priced at a coupon and re-offer yield of 7.300 per cent which represents a spread of 447 basis points above the 30-year US Treasury benchmark bond. The final yields reflect a tightening of 37.5bps and 45bps from Initial Price Thoughts on the 10-year and 30-year instruments respectively.
The transaction attracted an orderbook more than US$7.1 billion (2.4 times oversubscribed) with investor demand across the United Kingdom, North America, Europe, Asia, Africa and others. With respect to investor profile, demand came from a combination of Fund Managers, Insurance and Pension Funds, Hedge Funds, Banks and other Financial Institutions.
This announcement does not constitute an offer or invitation to sell, or any solicitation of any offer to subscribe for or purchase, any securities to any person in any jurisdiction and nothing contained herein shall form the basis of any contract or commitment whatsoever.
This announcement does not contain or constitute an invitation, inducement or solicitation to invest. This announcement is directed only at and is for distribution only to persons who (i) are outside the United Kingdom, (ii) are “investment professionals” falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended) (the “Order”), (iii) are persons falling within Article 49(2)(a) to (d) (“high net worth companies, unincorporated associations etc.”) of the Order or (iv) are other persons to whom an invitation or inducement to engage in investment activity (within the meaning of the Financial Services and Markets Act 2000) in connection with the issue or sale of any shares may otherwise lawfully be communicated or caused to be communicated (all such persons in (i), (ii), (iii) and (iv) together being referred to as “Relevant Persons”). This announcement is directed only at Relevant Persons and must not be acted on or relied on by persons who are not Relevant Persons. Any investment or investment activity to which this announcement relates is available only to Relevant Persons and will be engaged in only with Relevant Persons.
The South African government views the success of the transaction as an expression of continued investor confidence in the country’s sound macro-economic policy framework and prudent fiscal management.
Source: Government of South Africa