South Africa Seeks $500M via Innovative Foreign Currency Borrowing Call

The Republic of South Africa, through its National Treasury, has officially invited eligible financial market participants to submit funding proposals aimed at raising a minimum of US$500 million as part of the country’s 2025/26 foreign currency borrowing programme. The request for proposals (RFP), issued on Friday, is part of a broader strategy to diversify the sovereign’s external financing sources, reduce risk, and secure cost-effective funding amid evolving global market conditions.

Rethinking Sovereign Finance: Moving Beyond Eurobonds

In a significant shift from traditional funding models, South Africa’s National Treasury is exploring innovative mechanisms beyond conventional Eurobond issuances to meet its foreign currency obligations. The objective is to broaden the toolkit for hard currency funding while maintaining flexibility for future liability management actions, in line with the country’s dynamic debt strategy.

According to Treasury, this initiative aims to:

• Diversify funding instruments

• Reduce execution and market volatility risks

• Minimize the total cost of funding

• Enhance the sovereign’s financial agility

“Proposals should raise, on a stand-alone or combined basis, a minimum amount of US$500 million. If funding is offered in another hard currency, the counterparty must commit to swapping the proceeds into US dollars at closing,” the Treasury stated.

Who Can Participate?

The call for proposals is open to a broad spectrum of market players, including:

• Primary dealers in South African government securities

• Globally active arranging banks

• Multilateral financial institutions

• Institutional investors

• Regulated financial entities with the ability to mobilize large-scale funding

These entities are encouraged to leverage their expertise and financial platforms to propose cost-effective and executable solutions.

Acceptable Instruments and Structures

Treasury has outlined a diverse range of eligible instruments that it will consider, including but not limited to:

• Bilateral term loans

• Private placements of floating rate notes

• Repurchase agreements (repos) against sovereign collateral

• Cross-currency swaps or total return swaps with US dollar funding legs

• Other structured note formats

Proposals that incorporate Environmental, Social, and Governance (ESG) or sustainability-linked features are highly encouraged, especially if they align with the National Treasury’s ESG framework.

This signals South Africa’s intent to integrate sustainability goals into its sovereign finance strategy, in line with global trends toward green and responsible investing.

Evaluation Criteria: What Will Treasury Prioritize?

Submissions will be assessed on multiple criteria, with a strong emphasis on:

• All-in cost of funds, measured as a spread over SOFR (Secured Overnight Financing Rate) or an equivalent benchmark

• Certainty and speed of execution

• Fit with the country’s maturity profile and peak debt servicing periods

• Operational simplicity and ease of implementation

• Resilience to external shocks, such as exchange rate volatility and interest rate spikes

Instruments that demonstrate strong cost-efficiency, risk management features, and execution feasibility are more likely to receive favorable consideration.

Submission Requirements and Deadline

Interested parties are required to submit a PDF term sheet detailing the following:

• Proposed amount, tenor, pricing, and indicative spread

• Settlement date

• Key covenants or conditions precedent

• Collateral requirements (if applicable)

• Applicable governing law and documentation platform

• Any associated ESG or sustainability characteristics

Submission deadline:

• Wednesday, 6 August 2025, at 12:00 PM (South African Standard Time)

Evaluation period:

• Thursday, 7 August to Friday, 29 August 2025

Submissions must be emailed to: 📧 debtissuanceandmanagement@treasury.gov.za

For enquiries, contact:

• Terry Bomela Msomi, Director: Treasury Funding ☎️ +27 12 315 5135

• Wanga Cibi, Chief Director: Liability Management ☎️ +27 12 315 5132

Treasury confirmed that this request for proposals does not contain any material non-public information and that all interactions will be conducted confidentially and in accordance with South African public finance regulations.

Enhancing Market Engagement and Fiscal Resilience

The move reflects South Africa’s strategic efforts to strengthen fiscal sustainability, manage public debt proactively, and tap into alternative financing ecosystems in an environment marked by global economic uncertainty and fluctuating capital markets.

By embracing a more flexible and innovative approach, the Treasury is signaling its readiness to respond to market dynamics, meet its financing needs prudently, and support the broader objectives of economic growth, fiscal discipline, and sustainable development.