Kganyago still upbeat on plan to raise $1bn
May 14, 2009
By Nasreen Seria
World capital markets "are not shut for everybody", National Treasury director-general Lesetja Kganyago said in Dakar, Senegal yesterday.
Kganyago was speaking at the African Development Bank's annual meeting before starting a trip to raise as much as $1 billion (R8.5bn) in South Africa's first global sale of bonds in two years.
Treasury officials flew to Los Angeles yesterday to meet potential investors. Kganyago goes to New York today for similar discussions.
The officials would travel to Boston, London and Germany for presentations until next Wednesday, Kganyago said. "We will assess what investors are saying and what the concerns are about South African credit."
Earlier this year, "investors were all asking about whether Trevor Manuel will stay (as the finance minister) and who will take over. We are happy we have a good guy that has replaced him," Kganyago said, referring to Finance Minister Pravin Gordhan, the former SA Revenue Service head.
"He is well known in investor and banking circles. It makes our job much easier to communicate to investors that there is policy continuity."
While it was "difficult to say" how much investor appetite there would be for the bond, "the markets are conducive", Kganyago said.
The government needs to finance a budget deficit that it forecasts will reach 3.8 percent of gross domestic product in the year to March 2010, the highest in a decade. South Africa joins Slovenia and Croatia in looking to take advantage of a drop in borrowing costs and increased investor appetite for emerging market assets.
"There are number of peer countries that have done bond deals in the past few weeks," Kganyago said. "We have seen our spreads come in quite significantly over that period."
The extra yield investors demand to own South Africa's bonds instead of US treasuries fell 3 basis points yesterday to 3.32 percentage points, compared with 3.9 percentage points a month ago. Spreads for emerging market nations worldwide narrowed to 492 basis points from 565 in the period.
"What we said in the budget was that we would borrow a $1bn equivalent," Kganyago said. "That is at most the totality of what we require."
South Africa last sold dollar bonds in May 2007, when it issued $1bn of 25-year securities at 120 basis points more than US treasuries.
JPMorgan Chase and Absa have been appointed to lead the sale, while Standard Bank Group is the co-lead arranger.
Sales of bonds by companies and governments in developing economies have reached almost $59.6bn this year, up 62 percent on last year. - Bloomberg
|
|
