National Treasury still intends launching a rand-denominated Islamic bond sometime in the current 2023/4 fiscal year, but the timing of the launch is uncertain.
In November, 2021 the intention was to still launch it in the 2021/22 fiscal year as a way of diversifying the debt portfolio and introducing a new set of savers into its funding universe.
It has previously issued a $500 million (R9.1 billion) sukuk bond in 2014, when it became the first African nation to issue a sovereign shariah-compliant bond.
At the time it received subscriptions worth $2.2bn and it will be hoping for a similar over-subscription when it launches its rand-denominated bond.
Treasury said at the time that the decision to issue an Islamic bond was informed by a drive to broaden the investor base and to set a benchmark for state-owned companies seeking diversified sources of funding for infrastructure development.
It said the sukuk bond had an investor distribution consisting of 59% from the Middle East and Asia; 25% from Europe; 8% from the US; and the balance from the rest of the world.
S&P Global Ratings cut South Africa’s credit rating to junk in April, 2017 when Pravin Gordhan was fired as finance minister by former president Jacob Zuma.
In 2018, the Treasury issued $2bn in foreign bonds, despite the S&P downgrade and the transaction was oversubscribed.
Since 2020, Treasury has received various loans from international development institutions such as the International Monetary Fund and the World Bank to provide Covid-19 relief as well as loans for a just energy transition.
In fiscal year 2022/23, Treasury received R64.5bn in foreign loans from R31.3bn in 2021/22. It expects to only receive R44.4bn in 2023/24.
BUSINESS REPORT