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Cape Town. — South Africa said it appointed BNP Paribas SA, KFH Investment and Standard Bank Group Ltd to arrange a debut sukuk sale of at least $500 million.
Investor meetings will be held next month in Europe, Asia and the Middle East, Tshepiso Moahloli, director of debt issuance and management at the Pretoria-based National Treasury, said in an e-mailed response to questions. Meetings will run from September 8-12, according to two people with knowledge of the proposal, who asked not to be identified because they aren’t authorised to speak publicly.

“A sukuk issue may follow but the timing will depend on market conditions,” Moahloli said. “South Africa is looking to issue a benchmark-size sukuk.”

First-time sales of bonds that adhere to Islam’s ban on interest are set for a revival from the worst quarter in more than four years, with Luxembourg and Hong Kong seeking to market debut issues next month. Kenya, Bangladesh and Indonesia also announced plans to sell sukuk this year amid investor demand for bonds yielding more than developed-nation debt.

Islamic bond sales have fallen 82 percent to $2,6 billion this quarter compared with the previous three months, their lowest level since the first three months of 2010, according to data compiled by Bloomberg.

“External market conditions remain favourable at the moment,” Samir Gadio, head of African strategy at Standard Chartered Plc in London, said in an e-mail. “Obviously issuers are trying to come to the market before there is any re-pricing associated with further normalization in US monetary policy.”

Foreign Issuance
Former South African Finance Minister Pravin Gordhan earmarked $1,5 billion of foreign issuance over this and the next two fiscal years in his February budget, including a sukuk of as much as $500 million.

The nation sold its first euro-denominated bonds in more than eight years and issued 30-year dollar bonds last month.

Standard & Poor’s cut South Africa’s rating to BBB, on par with Russia and Brazil, in June, with a stable outlook. Fitch Ratings has a negative outlook on its BBB assessment, the second-lowest investment grade. — Bloomberg.