South Africa is seeking private sector partners to ramp up its sale of government bonds to the retail market, potentially widening its investor base and lowering the cost of borrowing.<\/p>\n
\u201cThere\u2019s a big opportunity,\u201d National Treasury Director-General Duncan Pieterse told Bloomberg in an interview at its Johannesburg offices on Monday.<\/p>\n
South Africa\u2019s existing retail-bond sale program raises about R3 billion ($184 million) a year, for a total amount currently outstanding of just over R20 billion, according to the Treasury.<\/p>\n
Pieterse said that this fell short of the retail market\u2019s potential and if sales could be durably increased \u2014 for example,, to as much as 30 billion rand \u2014 it could mean relying less on institutional investors and reducing the size of weekly bond auctions.<\/p>\n
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\u201cThat obviously gives you an opportunity to take some of that supply that you are currently putting there from a fixed-rate bond and inflation-linked bond perspective out of the market, further compressing yields and decreasing interest rates,\u201d he said.<\/p>\n
South Africa\u2019s borrowing requirement is projected to decline to R380 billion in 2026-27 from R563 billion in the current fiscal year, before rising to R569 billion in 2027-28.<\/p>\n
The rand and benchmark government bonds have rallied sharply in recent months, buoyed in part by growing confidence that the Treasury will deliver on its promise to control public finances, as well as the adoption of a 3% inflation target by the central bank that Finance Minister Enoch Godongwana explicitly endorsed in November.<\/p>\n
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Pieterse expects a private-sector partner to be appointed by the time of next year\u2019s budget in February, giving the Treasury a clearer sense of the baseline potential for retail issuance.<\/p>\n
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He\u2019s also optimistic about the prospects for further South African infrastructure bonds, after the country\u2019s debut issue attracted strong demand last year, raising R11.8 billion.<\/p>\n
While there\u2019s continued investor interest, the timing of the next issue will be determined by the pipeline of infrastructure projects that succeed in getting official backing, Pieterse said, while adding that infrastructure investment was a \u201cbig priority\u201d because of its economic impact.<\/p>\n
\u201cWe are trying to push it as much as we can because of our positivity for growth. And also of course, many of these infrastructure projects are very critical for service delivery,\u201d he said.<\/p>\n
\u00a9 2026 Bloomberg<\/p>\n<\/p><\/div>\n