African Government bonds
16 May 2007
The performance of the South African economy has created a solid investor
base in South African Government bonds. Early this year the pursuit of active
foreign debt management resulted in the buy back of USD263 million of the 2017
USD500 million bond.
Today we are announcing an additional buy-back of USD1,217 billion
equivalent of foreign debt. Of this amount, one billion dollars of the foreign
debt will be financed with the proceeds of a new USD1 billion bond maturing on
30 May 2022. The remaining balance of USD217 million equivalent will be
financed from Governmentâs own internal resources. There was an overwhelming
demand for the new debt issue which signifies South Africa's solid investor
following.
The net effect of this transaction would be a reduction of foreign debt as a
proportion of our total debt portfolio. In addition, short-term foreign debt
would be reduced by an amount of USD 1,121 billion, which reduces the country's
external vulnerability. This will also result in the reduction of the state
debt cost that releases resources for Government's key priorities.
The final repurchase level for the 2009, 2008 and 2017 notes that were
accepted are as follows:
2009: 28 basis points (bps) over the United States Treasury (UST) due
2009
2008: 2 bps below the 1-year Bund rate
2017: 72 bps over the UST due 2017.
The new issue was priced at 120 bps over the 10 year UST. The issue yield is
5,912%, the coupon is 5,875%, and settlement is on 30 May 2022.
This will be the lowest rate that the country has ever achieved in the
Dollar market and highlights the demand for the South African credit. South
Africa continues to enjoy the benefits of prudent macro economic policies.
Enquiries:
Thoraya Pandy
Cell: 082 416 8416
Issued by: National Treasury
16 May 2007
