South African government issues US$5 billion bonds in international markets


The South African government has managed to issue to two bonds worth 5 billion U.S. dollars in international markets, the National Treasury announced on Tuesday.

“The Republic of South Africa was able to successfully place 5 billion U.S. dollars in bonds maturing in 2029 and 2049 in the international capital markets on 23 September 2019, with 2 billion U.S. dollars and 3 billion U.S. dollars placed in the 2029 and 2049 tranches respectively,” National Treasury said in a statement.

National Treasury said the government was able to pre-fund an additional 1 billion U.S. dollar over the planned 4 billion U.S. dollar as a result of favorable conditions.

“Pre-funding is the early issuance of an amount planned to be issued in future years. This is done to take advantage of good pricing and favorable market conditions while reducing future borrowing needs.”

The government described the issuing of the bonds as a sign of confidence in South Africa’s macro economic policy.

“The South African government sees the success of the transaction believed to be the largest in ever out of Sub-Saharan African, as an expression of investor confidence in the country’s sound macro-economic policy framework and prudent fiscal management,” Treasury said.

Prof Jannie Rossouw, head of the School of Economic and Business Sciences at the University of the Witwatersrand, applauded the move.

“It’s good news for South Africa because it means that international investors are still interested in taking our bonds. They have confidence in the ability of the government to repay its debt,” he told Xinhua.

The government said the 10-year bond priced at a coupon rate and re-offer yield of 4.85 percent which represents a spread of 313 basis points above the ten-year US Treasury benchmark bond. The 30-year bond priced at a coupon rate and re-offer yield of 5.75 percent which represents a spread of 358.6 basis points above the 30-year U.S. Treasury bond. Enditem

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