Plaudits from bankers and investors
When South Africa returned to the Eurobond market in early April after an 18 month absence, debt management officials faced a challenging environment. Broader investor appetite for emerging market assets remained muted while confidence in South Africa had been dented by a series of negative ratings actions and two rapid changes of finance minister. Against this backdrop the ability of the National Treasury to raise $1.25bn of 10 year funding looks all the more impressive. Inevitably, investors demanded a generous new issue concession but the final pricing of 335bp over US Treasuries was still well inside initial levels. The success of the deal — the first from the sovereign since its landmark sukuk debut in September 2014 and the first global benchmark since July of that year — spoke to the professionalism and efficiency of funding officials. The DMO has consistently earned plaudits from bankers and investors alike for its dedication to investor work and commitment to maintaining communication with market participants, even in times of stress. The breadth and depth of South Africa’s domestic bond market also testifies to the competence of the National Treasury’s funding department. The government securities market is not only well diversified and tailored to the needs of investors, both domestic and international, but also provides a strong backdrop for a vibrant and sophisticated corporate bond market.