Today the Republic of South Africa successfully launched a new 7.375% US$bn 10-year Global bond maturing in April 2012. The transaction was preceded by a 6-day investor roadshow in major European and US centres. The transaction generated over US$bn in orders from 120 international investors. As a result of the significant demand the issue was increased from US$750mm to US$1,000mm.
The transaction represents South Africa's largest new issue bind in the capital markets to date. The issue attracted a significant number of new investors to South Africa's credit.
The new bond was priced at 240bps over the benchmark 10-year US bond (equivalent to $ Libor + 177 bps), 5bps tighter than the initial price talk. The coupon of 7.375% is the lowest ever coupon South Africa has paid for a US&denominated issue. The transaction completes the South African Government's funding program for fiscal year 2002/2003 in the international capital markets. The success of today's transaction reflects South Africa's economic fundamentals and consistent economic policies as recognised most recently in a sovereign rating upgrade by Moody's in November 2001 to Baa2.
Proceeds of the bond issue will allow for a further significant reduction of the net open forward position (NOFP) of the SARB.
Barclays Capital and JP Morgan acted as joint-lead managers and bookrunners for the transaction. The Standard Bank Group of South Africa acted as a senior co-lead manager.
This announcement is directed at persons who are located outside of the United Kingdom or, were located in the United Kingdom, only to (a) persons who have professional experience in matters relating to investments falling within Article 19 (1) (a) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2001 (the "Order") or (b) high net worth entities, and other persons to whom it may otherwise lawfully be communicated, falling within Article 49 (1) (a) of the Order (all being "relevant persons"). Any investments or services available in relation to the announcement are only available to such relevant persons and no other person should act on or rely on any information contained in this announcement.
This announcement is not an offer of securities for sale in the United States, which cannot occur absent registration or an exemption from registration. Any public offering of these securities in the United States will be made by means of a prospectus that may be obtained from the Republic of South Africa and will contain detailed information regarding the Republic , and its government, economy and fiscal affairs. The Republic of South Africa intends to register a portion of the bond issue with the US Securities and Exchange Commission for sale in the United States.