Infrastructure projects in South Africa have received a significant boost through a debut R1.5-billion debt issuance in the domestic market.
The New Development Bank’s (NDB’s) bond issuance in South Africa is a landmark transaction for NDB, and local bank Absa Corporate and Investment Banking (CIB) is pleased to participate in a transaction that will enable rand-based funding of projects relating to infrastructure.
NDB is a multilateral development bank established by the Brazil, Russia, India, China and South Africa, or Brics, bloc, with the purpose of mobilising resources for infrastructure and sustainable development projects in emerging markets and developing countries. NDB is the highest rated issuer to issue in the South African bond market since 2015.
“Absa is proud to have participated as the Joint Arranger and Dealer in the transaction which assisted the NDB. The South African bond market has struggled in recent years to attract new issuers to match growing demand from domestic investors looking for quality credit assets,” says Absa CIB head of debt capital markets Kumeshen Naidoo.
The decision by NDB to list a new rand bond programme was welcomed by all market participants, with 94% of bids being within or lower than price guidance.
“The issuance rates represent the tightest spreads achieved by a non-government issuer in 2023. The NDB - rated AA+ and AA by ratings agencies S&P and Fitch respectively - is now the highest rated issuer to issue in South Africa in recent years,” Naidoo continues.
By setting the tightest pricing point of any non-government issuer in the bond market this year, the outcome sets a strong benchmark for future issuance by NDB.
The well-supported order book - with bids totaling more than R2.5-billion - is a demonstration of strong liquidity support for the credit and allowed the issuer to exercise its option to upsize the issuance from R1-billion to R1.5-billion.
“The NDB’s debut bond issuance in South Africa provides NDB direct access to rand funding and sets the benchmark for future issuances to finance a range of projects relating to infrastructure and accelerate sustainable socioeconomic development in South Africa,” says Absa CIB director of debt capital markets Marcus Veller.
The domestic bond programme is integral to the future funding plans of NDB and will support the development of infrastructure and sustainable development projects in South Africa, says NDB treasury and portfolio management senior professional Paul Hoffman.
“Our arrangers, Absa and Standard Bank, played a key role in ensuring a successful debut issuance. This was crucial to demonstrate market access, depth and pricing commensurate to NDB’s strong credit profile,” adds Hoffman.
“As the leading pan-African banking group, Absa is committed to supporting infrastructural development in South Africa. This is in line with our commitment to play a shaping role in society and advancing socio-economic development,” concludes Veller.