South Africa will tap existing rand-denominated sukuk bonds as part of its funding plans for the current fiscal year.
We are “on track to tap the existing sukuk instruments, subject to the completion of the required hybrid structure and internal approval processes,” the National Treasury said in an emailed response to questions.
“Details regarding the targeted issuance size and the timing of the tap will be communicated closer to the issuance date.”
South Africa last tapped the Islamic-debt market in 2023 — the first sukuk sale in almost a decade — when it raised R20.4 billion ($1.2 billion). The offering drew almost double the amount sought.
“The taps could help improve liquidity gradually in the sukuk instruments given that their outstanding issuance is still modest,” said Samir Gadio, head of Africa strategy at Standard Chartered Plc.
“Improved liquidity will be key to broaden the appeal of these instruments to the wider market.”
The National Treasury announced on 17 June that it’s completed its budgeted foreign-currency funding requirement of about $3.2 billion for the 2026-27 fiscal year.
South Africa’s government said last week it will hold quarterly infrastructure-bond auctions to plug a R13 trillion shortfall in spending for upgrades to the nation’s roads, water systems and electricity network that are needed to boost economic growth.
Africa’s biggest economy has expanded by an average of less than 1% a year over the past decade.
The size of each quarterly tap issuance won’t be fixed as a standing amount, but will be determined per the funding requirements of identified eligible infrastructure projects, the availability and timing of project disbursement needs, market conditions as well as the Treasury’s broader fiscal funding requirements, it said.
“The proposed sukuk tap issuance is not linked to specific infrastructure projects,” the Treasury said on Tuesday.
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