Tuesday, 10 March 2009

South Africa is Considering Going to the Bond Market, First Time Since 2007

We got a note from an investor yesterday in which the Republic of South Africa announced it is contemplating a potential bond issue in the coming months.

The government is currently in discussions with investors to gauge potential demand and appropriate pricing levels for a benchmark size, ten-year bullet bond in the current environment. ''RSA is a judicious issuer that comes to the international markets no more than once a year and has not come since 2007,´´ said the note. The number of dollar- and Euro-denominated South Africa bond issues in the past 12 years was limited to eight. Bookrunners might be led by Standard Bank (of South Africa, obviously.)

Demand for sovereign debt primary offerings has shown resilience this year, despite the rout in markets and limited risk-taking. The government probably has some margin to wait until the dust settles and markets price new issues better.

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