SA Raises US$3.5bn in Global Bonds at Lower Yields, Boosting Fiscal Space

The transaction comprised two U.S. 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.

 

The National Treasury has confirmed the successful issuance of US$3.5 billion in international capital markets, marking a major achievement for South Africa’s funding strategy and signalling renewed global investor confidence in the country’s fiscal management.

The transaction comprised two U.S. 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.

Lower Yields Reduce SA’s Borrowing Costs

The Treasury highlighted a significant improvement in pricing compared to the country’s last dollar-bond issuance in 2024:

• 12-year bond: priced at 6.25%, down from 7.1% in 2024

• 30-year bond: priced at 7.375%, down from 7.95% in 2024

This reduction in yields directly benefits South Africa by lowering future debt-service costs and expanding fiscal room for social and developmental programmes.

“Lower yields translate into lower debt service costs, which create greater fiscal space for government to fund other urgent social and developmental priorities,” Treasury said.

Strong Global Investor Demand

The issuance attracted US$13.1 billion in orders, more than 3.7 times oversubscribed. Investors across major financial centres—including the UK, North America, Europe, Asia, Africa and others—took part.

Participants ranged from:

• Pension funds

• Insurance companies

• Fund managers

• Hedge funds

• Banks

• Other large financial institutions

Treasury Director-General Duncan Pieterse said the broad investor participation reflects confidence in South Africa’s macroeconomic stability and fiscal discipline.

Raising More Than Planned Amid Favourable Conditions

The 2025 Budget projected US$5.3 billion in foreign-currency borrowing for 2025/26. Of this amount:

• US$2.8 billion has already been secured from multilateral development banks and international financial institutions.

• The remaining US$2.5 billion was expected to be raised via global markets.

However, due to attractive pricing conditions, Treasury opted to increase the issuance to US$3.5 billion, exceeding the initial target.

Government will use US$1 billion to prefund 2026/27’s foreign funding requirement of US$4.3 billion, creating a buffer against future market volatility.

Transaction Partners and Market Innovation

Treasury appointed:

• Deutsche Bank

• Nedbank

as Joint Bookrunners, with RHO Capital serving as the empowerment partner—demonstrating ongoing efforts to integrate transformation within major financial transactions.

The National Treasury reiterated its commitment to:

• Responsible fiscal management

• Reducing borrowing costs

• Diversifying funding sources

• Increasing resilience to global market shocks

It also highlighted progress in expanding domestic financing instruments, including the Infrastructure and Development Finance Bond, launched in November 2025, which aims to support long-term investment in public infrastructure.

Strengthening Fiscal Sustainability

The successful bond issuance comes at a crucial moment when South Africa is working to stabilise debt, attract investment, and sustain credibility with global markets. Treasury emphasised that concessional funding, bilateral engagement, and diversified borrowing will remain central to ensuring long-term fiscal stability.