Absa plays pivotal role in landmark transaction aimed at improving infrastructure

Infrastructure projects in South Africa have received a significant boost through a debut R1.5bn debt issuance in the domestic market.

The New Development Bank’s (“NDB”) bond issuance in South Africa is a landmark transaction for NDB and Absa is pleased form part of a transaction that will enable Rand-based funding of projects relating to infrastructure.

NDB is a multilateral development bank established by Brazil, Russia, India, China and South Africa (BRICS) with the purpose of mobilising resources for infrastructure and sustainable development projects in emerging markets and developing countries (EMDCs). NDB is the highest rated issuer to issue in the South African bond market since 2015.

“Absa is proud to have participated as the Joint Arranger and Dealer in the transaction which assisted the New Development Bank – 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,” says Kumeshen Naidoo, Head of Debt Capital Markets at Absa Corporate and Investment Banking (CIB) 

The decision by NDB to list a new Rand (“ZAR”) bond programme was welcomed by all market participants, with 94% of bids being within or lower than price guidance.

Naidoo continues: “The issuance rates represent the tightest spreads achieved by a non-Government issuer in 2023. The NDB, rated AA+ and AA by S&P and Fitch respectively, is now the highest rated issuer to issue in South Africa in recent years.”

By setting the tightest pricing point of any non-Government issuer in the bond market in 2023, the outcome sets a strong benchmark for future issuance by NDB. The well-supported orderbook, with bids totaling more than R2.5bn is a demonstration of strong liquidity support for the credit and allowed the issuer to exercise its option to upsize the issuance from R1bn to R1.5bn.

“New Development Bank’s debut bond issuance in South Africa provides NDB direct access to Rand funding and setting the benchmark for future issuances to finance a range of projects relating to infrastructure and and accelerate sustainable socio-economic development in South Africa,” says Marcus Veller, Director of Debt Capital Markets at Absa CIB.

The domestic bond programme is integral to the future funding plans of NDB and will support the development of infrastructure and sustainable development projects in South Africa, says Paul Hoffman, Senior Professional – Treasury and Portfolio Management at NDB.

“Our arrangers, Absa and Standard Bank, played a key role in ensuring a successful debut issuance which was crucial to demonstrate market access, depth and pricing commensurate to NDB’s strong credit profile,” adds Hoffman.

“As the leading Pan-African banking group, Absa is committed to supporting infrastructural development in SA. This is in line with our commitment to play a shaping role in society and advancing socio-economic development.,” concludes Veller.