2 February 2011
Standard Bank Group forecasts increasing deals from South African issuers in 2011
Standard Bank Group expects to see an increase in the number of offshore bond issues emerging from South Africa in 2011. This as the country's international prestige is enhanced by its recent BRIC (Brazil, Russia, India, China) membership as well as the high regard in which South Africa's offshore debt issues are held.
In 2010 South African corporates made a cautious return to international markets, taking advantage of high levels of global liquidity for attractive long term funding and positive emerging market sentiment. Naspers, AngloGold, Steinhoff and Mondi issued on aggregate in excess of US$3-billion in 2010, at competitive rates.
State owned entities were absent from the offshore capital markets in 2010. However, 2011 has already seen Eskom tapping the US-dollar market with a 10-year US$1.75-billion issue. Given the importance of the capital expenditure programme in South Africa to the country's long term growth path, the offshore markets will increasingly play an important role as a source of large-scale funding.
South Africa's ability to attract quality offshore debt has been rewarded with the 'Emerging Market Deal of the Year' from Euroweek for its 5.5% US$2-billion bond, due in 2020. The transaction, which was jointly lead managed by Standard Bank, was significantly over subscribed and was successfully launched in March 2010.
Kennedy Bungane, Standard Bank Group's Chief Executive of Corporate and Investment Banking in South Africa, says: "The success of this deal highlights an international trend that we are seeing whereby major international investors see the value in emerging markets and South African credit in particular. The deal also highlights the positive investment stature that South Africa is currently enjoying. A stature that is built on sound economic fundamentals, as well as being a gateway destination to the African continent. This transaction is further testament that as a leading corporate and investment bank in South Africa, Africa and selected emerging markets, Standard Bank is well positioned to capitalize on this opportunity."
Significantly, the award is decided as a result of an annual poll undertaken by Euroweek of major international financial institutions, deal makers, and peers rather than by any formal judging criteria.
Florian von Hartig, Standard Bank Group's Global Head of Debt Capital Markets, says: "This deal can be considered as a benchmark for future capital raising activities by the South African government and other South African issuers. Standard Bank has been working closely with the South African National Treasury on a number of debt raising transactions in recent years and has developed a strong capability to issue and distribute South African and African credit in the global markets.
"This award-winning Republic of South Africa transaction is the perfect example of the type of transaction Standard Bank is proud to be associated with. Not only was the transaction significantly oversubscribed, but it had the lowest absolute coupon ever achieved in the USD market by the Republic and it was the single largest primary issue undertaken at USD2 billion. The transaction also saw significant interest in the aftermarket, proving the success of the deal for global investors, the National Treasury as well as the broader investment community."
Standard Bank Group has completed numerous capital markets transactions for governments on the continent in 2010 and ended the year ranked as the top bank for the issuance of sub-Sahara African debt according to data compiled by Bloomberg.