Fortress places R1.6bn bond tied to new Zaronia rate

Fortress Real Estate Investments has listed a R1.6bn seven-year bond through its domestic medium-term note programme, reflecting its continued activity in South Africa’s debt capital markets and an early shift in how interest rates are being benchmarked locally.

This comes after the group raised R1.056bn in a domestic medium-term notes issuance in March which attracted bids of R3.75bn, showing strong investor demand.

The latest placement positions Fortress among the early adopters of the transition away from the Johannesburg Interbank Average Rate (Jibar) towards the South African Overnight Rate Average (Zaronia), which is being phased in as the new reference point for pricing debt instruments.

The bond was priced at a margin of 161 basis points above Zaronia.

The issuance makes Fortress the first listed property group to issue a bond referencing Zaronia.

We are proud to be the first property counter to issue a Zaronia-referenced note, reflecting our commitment to staying ahead of market developments as South Africa transitions its benchmark rate framework

—  Ian Vorster, Fortress CFO

“Following our successful bond auction in March, the placement of a 7-year unsecured note reflects continued investor confidence in Fortress and South Africa’s credit market,” said CFO Ian Vorster.

“We are also proud to be the first property counter to issue a Zaronia-referenced note, reflecting our commitment to staying ahead of market developments as South Africa transitions its benchmark rate framework,” Vorster added.

This shift forms part of a structured transition led by the Reserve Bank and its Market Practitioners Group (MPG), aimed at bringing local markets in line with global best practice and improving transparency in how interest rates are set.

Fortress said the proceeds will be used to refinance existing debt and for general corporate purposes.

“The transaction supports Fortress’ funding strategy to optimise its cost of capital, diversify funding sources, and manage its debt maturity profile. The increased exposure to the debt capital market is supported by favourable pricing and a longer tenor,” it said.