|The South African National Roads Agency (Sanral) issued six bonds totalling R850-million, financial services firm Rand Merchant Bank (RMB) said on Friday.
The issuing of six bonds, which would be settled on September 22, was expected to raise up to R1-billion, but had received bids for R1,5-billion, RMB reported.
The bond auction formed part of the agency’s plans to raise R24-billion in capital by May 2010, which in turn formed part of its larger R44-billion capital raising plans by 2012. The funds would used to finance new road infrastructure, as well as the upgrade of existing roads.
The company said in a media statement that paper worth R850-million had been placed in the market at spreads of between 1,1% and 2,2% over the government yield curve.
The bonds included two inflation-linked bonds, which would mature in 2013 and in 2023, as well as four fixed-rate bonds with five- to 20-year maturities.
“The bulk of demand was in long-dated 20-year paper. The paper is sought after as it is good quality credit,” RMB Debt Capital Markets head of distribution David Rajak commented.
RMB and Absa Capital, along with its empowerment partner Vunani Capital, had been appointed as joint-lead arrangers for Sanral’s capital raising efforts.
Sanral’s first bond auction, which was held in July, had raised R2-billion though the issuance of one five-year inflation-linked bond that would mature in 2013, as well as three fixed-rate bonds with 10-, 14- and 20-year maturities.
RMB stated that the Sanral bonds would be tapped until 2012, while further bonds could be added to the Sanral suite over time.
The agency would use the funds to build a toll road system in Gauteng, as part of its Gauteng Freeway Improvement Project, which comprises the upgrade of the N1 to Pretoria, the Johannesburg ring roads, as well as the R21 from the OR Tambo International Airport to Pretoria.
Sanral expected the next bond auction to take place in November.