South Africa draws global interest for $500 million funding initiative

By Colleen Goko

JOHANNESBURG (Reuters) -South Africa’s National Treasury has attracted over 100 global proposals for its $500 million foreign currency financing initiative as it seeks to diversify its funding sources.

The initiative, announced in July, aims to explore innovative financing options to raise cash for Africa’s most industrialised economy which go beyond traditional Eurobonds.

The Treasury said it would consider bilateral term loans, private placements, structured notes, and instruments linked to environmental, social and governance goals.

“The market response to our call for proposals has been positive, demonstrating clear appetite for the National Treasury to diversify its foreign currency funding sources,” Terry Bomela-Msomi, Director of Treasury Funding & Capital Markets, told Reuters.

Bomela-Msomi noted substantial interest from sell-side as well as buy-side institutions, boutique investment banks, and non-financial lenders eager to lend cash to South Africa’s government.

ESG-related proposals have been particularly abundant, aligning with the Treasury’s efforts to develop a framework for that.

“The minimum funding target of $500 million will be comfortably met through this process,” Bomela-Msomi said, emphasising that Eurobonds would remain a complementary part of the Treasury’s funding strategy.

South Africa last tapped international capital markets in November 2024, raising $3.5 billion.

Analysts at Standard Chartered suggest South Africa may issue new hard-currency bonds in November after the presentation of its medium-term budget policy statement.

Borrowing costs are currently favourable for African sovereigns.

Nigeria, for instance, is pursuing parliamentary approval for $2.3 billion in loans and a $500 million debut sovereign sukuk, and is expected to sell an international bond before year-end.

Angola has turned to private creditors to finance major infrastructure projects, including a new refinery, and sold $1.75 billion in dollar-bonds this week.

(Reporting by Colleen Goko, editing by Ed Osmond)