The National Treasury announced on Friday that its $3.5bn (about R60bn) dollar-denominated eurobonds, issued on international capital markets at much lower yields than a year ago, had been more than three times oversubscribed.
“The transaction consisted of two dollar-denominated bonds, a 12-year bond maturing in 2037 and a 30-year bond maturing in 2055, each of which was $1.75bn. The bonds [were] priced at more favourable rates than the government achieved in its previous international bond issue in November 2024, reflecting improved investor perceptions of South Africa’s fiscal and economic outlook.”
The announcement was made as the rand breached the R17/$ mark, trading at R16.95 by late Friday afternoon. The Treasury said the 12-year bond was priced at a yield of 6.25%, compared with the 7.1% at which the government issued a 12-year dollar bond in 2024, while the 30-year bond was priced at 7.375%, compared with 7.95% in 2024.
“Lower yields translate into lower debt service costs, which create greater fiscal space for the government to fund other urgent social and developmental priorities. Investor demand was exceptionally strong, with the transaction attracting an order book of $13.1bn, which was 3.7 times oversubscribed,” a statement said.
“Investors from the UK, North America, Europe, Asia, Africa and other regions participated, with orders placed by a wide range of high-quality investors, including fund managers, insurance companies, pension funds, hedge funds, banks, and other financial institutions.”
The robust demand and broad participation by investors reflect continued confidence in our sound macroeconomic policy framework and prudent fiscal management
— Duncan Pieterse, National Treasury director-general
Duncan Pieterse, director-general of the National Treasury, said the windfall of preferential yields came amid a raft of positive fiscal data for the South African economy and showed a strong appetite from investors.
“The robust demand and broad participation by investors reflect continued confidence in our sound macroeconomic policy framework and prudent fiscal management,” he said.
An earlier version of finance minister Enoch Godongwana’s 2025 budget pencilled in $5.3bn in foreign currency borrowings for 2025/2026, of which about $2.8bn has been secured from multilateral development banks and international financial institutions
The National Treasury statement said the remaining $2.5bn would be raised on international capital markets. “However, while executing the transaction, government raised the allocation to $3.5bn to take advantage of favourable pricing. Government will set aside $1bn of this to prefund the 2026/27 foreign currency funding requirement of $4.3bn. The National Treasury appointed Deutsche Bank and Nedbank as joint bookrunners for the transaction, with RHO Capital acting as the empowerment partner.”
S&P Global Ratings gave South Africa its first rating upgrade since 2005 in mid-November, raising the outlook from BB- to BB. This came on the heels of the medium-term budget policy statement, which forecast the debt-to-GDP ratio would peak at 77%.
“The total amount guaranteed by government is expected to decrease from R498.9bn on 31 March 2024 to R491.9bn on 31 March 2025, while the exposure amount will increase by R6.1bn to R439.2bn over the same period,” Godongwana’s 2025 Budget Overview said.
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