S. Africa Sells First Dollar Bond Since ‘22, Raises $3.5 Billion

(Bloomberg) -- South Africa’s first dollar bond sale since 2022 drew strong demand, signaling confidence in a coalition government formed after May elections.

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The country raised $3.5 billion through two bonds with maturities of 12- and 30-years, priced at yields of 7.1% and 7.95% respectively. Demand for the new bonds exceeded $10 billion.

“We’re happy to see South Africa back after 30 months,” said Søren Mørch, head of emerging-market debt at Danske Bank. “We’re positive on the reform agenda after the election, and the government deserves the benefit of the doubt.”

South Africa’s new coalition government, which comprises the African National Congress, the centrist Democratic Alliance and eight other parties, has made reducing unemployment and faster economic growth its top priorities.

The sale comes amid uncertainty for global monetary policy, after Donald Trump won the US elections. The rise in US Treasury yields suggest investors believe that his policies may keep funding costs elevated, complicating the environment for nations like South Africa.

South Africa’s dollar-denominated bonds were the worst performers in a Bloomberg Sovereign hard-currency index tracking emerging and frontier markets on Tuesday. Yields on the nation’s eurobond due in April 2052 jumped by 18 basis points to 7.89%. Even so, they were below levels as high as 9% before the elections.

“Timing is decent — the spread has narrowed significantly,” said Danske’s Mørch.

Citigroup Inc. and Goldman Sachs Group Inc. acted as bookrunners for the sale.

--With assistance from Hannah Benjamin-Cook and Mpho Hlakudi.

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