Pretoria: The National Treasury has announced the successful issuance of US$3.5 billion in the international capital markets. The transaction comprised two dollar-denominated bonds: a 12-year bond maturing in 2037 and a 30-year bond maturing in 2055, each valued at US$1.75 billion.
According to South African Government News Agency, the 12-year bond was priced at a re-offer yield of 6.25%, which is lower than the 7.1% yield at which the government issued a similar bond in 2024. The 30-year bond, on the other hand, was priced at 7.375%, compared to 7.95% in 2024. The lower yields are expected to reduce debt service costs, providing the government with greater fiscal flexibility to address urgent social and developmental priorities.
Investor interest was significant, with the transaction attracting an order book of US$13.1 billion, making it 3.7 times oversubscribed. Participants included investors from regions such as the United Kingdom, North America, Europe, Asia, and Africa. Orders were placed by a range of high-quality investors, including fund managers, insurance companies, pension funds, hedge funds, banks, and other financial institutions.
Duncan Pieterse, the Director-General of the National Treasury, stated that the strong demand and broad investor participation reflect continued confidence in the country's macroeconomic policy framework and fiscal management. The 2025 Budget had initially set a target of US$5.3 billion in foreign currency borrowings for the 2025/26 fiscal year, with about US$2.8 billion already secured from multilateral development banks and international financial institutions.
The government initially intended to raise the remaining US$2.5 billion in international capital markets. However, due to favorable pricing, the allocation was increased to US$3.5 billion. Of this amount, US$1 billion will be set aside to prefund the 2026/27 foreign currency funding requirement of US$4.3 billion.
The National Treasury appointed Deutsche Bank and Nedbank as Joint Bookrunners for the transaction, with RHO Capital acting as the empowerment partner. The Treasury expressed appreciation for the strong support from the global investor community and reiterated its commitment to responsible fiscal management and the long-term sustainability of South Africa's public finances.
The government's funding strategy focuses on reducing the overall cost of borrowing while diversifying funding sources and strengthening resilience against external market volatility.