South Africa has raised $3.5bn (about R59bn) from international capital markets through a heavily oversubscribed dual-tranche Eurobond, taking advantage of improved investor sentiment and favourable pricing to strengthen its fiscal position and pre-fund future borrowing needs.
According to the Treasury on Friday, the issuance, comprising a 12-year bond maturing in 2037 and a 30-year bond maturing in 2055, each worth $1.75bn, marks the country’s first foray into global bond markets since November 2024.
Both tranches priced significantly lower than last year’s issue, offering relief to the National Treasury’s debt service costs. The 12-year bond priced at 6.25%, down from 7.1% in 2024, while the 30-year bond priced at 7.375%, compared with 7.95% previously.
Lower interest rates on the bonds mean investors feel more confident about how South Africa is managing its money and economy. This also means the government will pay less in interest.
“The robust demand and broad participation by investors reflects continued confidence in our sound macroeconomic policy framework and prudent fiscal management,” said Treasury director-general Duncan Pieterse.
Investor demand was exceptionally strong, with the order book peaking at $13.1bn — 3.7 times oversubscribed — attracting orders from institutional investors across the UK, North America, Europe, Asia, Africa and beyond.
Participants included fund managers, pension funds, hedge funds, insurance firms and global banks, suggesting renewed appetite for South African debt amid global rate normalisation.
The bonds were arranged by Deutsche Bank and Nedbank as joint bookrunners, with RHO Capital acting as the empowerment partner.
The 2025 budget projected $5.3bn in foreign currency borrowing for 2025/26. Of that, about $2.8bn had already been secured through multilateral and international financial institutions. Although only $2.5bn was earmarked for capital market issuance, the Treasury upsized the deal to $3.5bn, capitalising on better-than-expected pricing.
Of the excess proceeds, $1bn will be used to pre-fund the 2026/27 borrowing requirement ($4.3bn), providing a fiscal cushion going forward.
Treasury said this issuance also aligns with its strategy to lower the overall cost of borrowing, diversify funding sources, and build resilience against external shocks — a crucial consideration as the global interest rate cycle remains volatile.
“Government will continue to mobilise concessional funding and engage with bilateral lenders,” the Treasury said.
This issuance also follows the recent launch of the Infrastructure and Development Finance Bond in the domestic market in November, a new instrument aimed at broadening the investor base for local projects.
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