Investors show they like SA credit :: Namibia Internet Gateway cc ::

Articles: Investors show they like SA credit

Posted by admin on Friday, March 31, 2006 - 08:07 AM

SA’s popularity with international investors was much in evidence yesterday when the national treasury succeeded in placing €750m of euro-denominated bonds at a spread that for the first time was below 100 basis points over the European benchmark.
Hilary Joffe

The 10-year bonds were priced at a spread of only 62 basis points over the swop curve, or 81 basis points over the equivalent German government bonds. This was way below the 195 basis point spread at which SA’s last international bond issue was priced two years ago. The narrower spread indicated that investors saw SA as being far less risky, compared to Europe or the US, and were willing to lend us money at far cheaper rates. National treasury director-general Lesetja Kganyago said last night that SA had established a following among international investors who had demonstrated once again that they liked SA credit. The upgrades to SA’s credit rating over the past year also resulted in the bond issue attracting new investors, who only invest in high grade bonds. The issue, which followed an international road show by treasury officials over the past week, was oversubscribed, with offers coming in for €1,1bn of bonds. The largest part of the issue went to UK investors, who took up 38%, with a further 22% in Germany, 12% in the US and the rest with Asian investors. The issue was successful despite increased bearishness towards emerging markets in recent weeks. The issue marks a return to offshore markets after the national treasury cancelled a planned $1,5bn international bond issue last year.

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