South Africa beats Kenya to become first African country to issue an international bond in 2016

The South African National Treasury has issued a $1.25 billion 10-year global bond at a coupon rate of 4.875 percent, which represented a spread of 335 basis points above the 10-year US Treasury’s benchmark bonds. This is considerably better than earlier this year when the premium foreign investors demanded to hold South African dollar debt rather than US Treasuries reached a seven-year high of 525 basis points on January 20 2016. South Africa thereby beat Kenya to the international capital market to become the first African country to issue an international bond this year.

Kenya said earlier in April that it would test the waters and become the first African country to tap global debt markets in 2016. The World Bank has praised Kenya for its strong growth, a solid agriculture sector, and infrastructure investment so there was expected to be good demand for the Kenyan bond. African governments issued $15.5 billion in 2015, 22 percent lower than 2014 and the lowest level since 2012 as depreciating currencies, the oil price collapse and the slowdown in Chinese economic growth cut foreign investors’ appetite for African bonds. Follow this link for more stories.