Breaking News
Get 40% Off 0
😲 Missed the +20.8% surge in our stock strategy last month? Not again! Get premium insights Get 40% Off Now

'BRICS bank' issues first South African rand bonds

Published Aug 16, 2023 03:37AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: A view of logo of New Development Bank (NDB) at its headquarters in Shanghai, China July 10, 2023. REUTERS/Aly Song/File Photo
 
USD/ZAR
-0.54%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
ZAR/USD
+0.49%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

By Rachel Savage

JOHANNESBURG (Reuters) - The development bank founded by the so-called BRICS countries closed the auction for its first South African rand bonds on Tuesday, as it comes under pressure to boost its local currency fundraising and lending.

The New Development Bank's (NDB) two bonds, a 1 billion rand ($52.3 million) five-year note and a 500 million rand three-year note, attracted 2.67 billion rand of bids in total, according to auction results shared by two investors with Reuters.

South Africa's finance minister said that the NDB, which was founded to give the BRICS members - Brazil, Russia, India, China and South Africa - more control of development financing, was not doing enough local currency lending, in an interview with Reuters ahead of the BRICS summit in Johannesburg next week.

The NDB did not respond to a request for comment on the bond auction.

Chief Financial Officer Leslie Maasdorp told Reuters in a recent interview that the bank aims to increase local currency lending, most of which has so far been in the Chinese yuan, from about 22% to 30% by 2026, but that there were limits to de-dollarisation.

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.

NDB's three-year rand bond was priced at a floating rate of 95 basis points (bps) above the three-month Johannesburg Interbank Average Rate (Jibar), while the five year was priced at Jibar +105 bps.

The most recent comparable South African government bonds were a 4.5-year bond priced at Jibar +90 bps and a seven year priced at Jibar +120 bps, said Raphi Rootshtain, a portfolio manager at Sasfin Wealth.

"It is interesting to note that most of the underlying lending activities in South Africa are to State Owned Companies (SOEs)," Rootshtain said. "So effectively the NDB will become the new proxy funding vehicle for SOEs which should come with additional risk."

The bond sale was arranged by Standard Bank, which declined to comment, and Absa Bank.

The sale "had... 94% of bids being within or lower than price guidance and the issuance rates representing the tightest spreads achieved by a non-government issuer in 2023," said Kumeshen Naidoo, head of debt capital markets at Absa.

($1 = 19.1206 rand)

 

 

 
'BRICS bank' issues first South African rand bonds
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.
  • Any comment you publish, together with your investing.com profile, will be public on investing.com and may be indexed and available through third party search engines, such as Google.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
Mesna Kroglica
Mesna Kroglica Aug 16, 2023 4:28AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
People will soon realize BRICS is a scam. A formation of dictators can't last as they all hate eachother aswell.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email