By: GBA

South Africa’s National Treasury has successfully issued the country’s first sovereign Infrastructure and Development Finance Bond, raising R11.795 billion in a debut auction that was more than twice oversubscribed.

The issuance marks a significant step in government efforts to expand investment in critical infrastructure required to support economic growth and improve public service delivery. The auction attracted bids exceeding R26 billion, reflecting strong market confidence and a subscription rate of 2.2 times.

The bond was introduced as part of a broader reform programme first outlined in the 2024 Medium Term Budget Policy Statement. These reforms aim to strengthen the public infrastructure pipeline while encouraging greater participation from private investors.

Proceeds from the Infrastructure and Development Finance Bond will be used exclusively to finance projects approved under the Budget Facility for Infrastructure. The facility is a mechanism within the national budget process that supports priority infrastructure projects through a rigorous project screening framework designed to ensure value for money and readiness for implementation.

In 2025, government restructured the Budget Facility for Infrastructure to operate four funding windows per year instead of one. This change enables national departments, provinces, municipalities and state-owned enterprises to apply for partial project funding, using public capital as a catalyst to mobilise additional private investment. The approach is intended to improve both the quality and scale of infrastructure delivery across the country.

Bond structure and allocation

The inaugural issuance was structured across two maturities and priced in line with prevailing market conditions to optimise borrowing costs:

• RI2036 with R6.996 billion issued at an interest rate of 8.575 percent.
• RI2041 with R4.799 billion issued at an interest rate of 9.13 percent.

National Treasury has indicated that the bonds will be tapped in future auctions to finance additional infrastructure projects aligned with the Budget Facility for Infrastructure.

The Infrastructure and Development Finance Bond is seen as a milestone in South Africa’s efforts to deepen domestic capital markets and develop financing instruments that crowd in private capital for priority sectors such as energy, water, transport and social infrastructure.

Strong investor demand also signals growing confidence in the country’s reform agenda and fiscal outlook, positioning infrastructure investment as a central pillar of long-term economic development.