What Bidvest’s Eurobond Tells Us About the Maturation of SA’s Debt Capital Market

Its depth runs into the trillions and its instruments are traded across jurisdictions and currencies, forming a continuous flow of capital between borrowers seeking long-term funding and investors seeking returns on their capital.

For emerging markets, and for Africa in particular, participation occurs almost entirely within the non-investment-grade segment – the continent's composite rating profile setting a narrow ceiling that limits how far even the strongest corporates can compress their spreads.

Capital in this market is also controlled by a core of institutions whose portfolios define liquidity conditions for everyone else. That concentration of decision-making power is only part of the barrier to entry; the disclosure burden and the legal work required to bring a transaction to market introduce an additional layer of cost and scrutiny that not every issuer is prepared to absorb. For listed corporates, disclosure is largely embedded in their existing reporting rhythm, but for others the diligence, documentation, and external legal fees can be significant enough to deter potential issuers who might otherwise qualify on credit strength alone. Only

a limited number of African corporates therefore manage to issue internationally with relative regularity.

Which is why Bidvest’s re-entry into the market is so significant.

In September this year, the company executed a dual-track liability management and refinancing exercise through its UK subsidiary, combining a new eurobond issue with a concurrent tender offer. Absa served as global coordinator and bookrunner, leading marketing strategy, investor engagement, and distribution alongside the international syndicate.

The strategy formed part of a broader debt reprofiling exercise, aimed at extending the group’s maturity profile and reducing short-term refinancing risk. Bidvest had an existing $478m bond maturing in 2026, and rather than carry both instruments simultaneously and absorb the associated cost of carry, the company structured the new issue to coincide with the repurchase of a substantial portion of the old one. The new $500m issuance, due 2032 on a seven-year non-call-three basis, effectively refinanced the previous issuance while establishing a fresh benchmark maturity. The transaction opened with initial price thoughts around the 6.75% area, but as the orderbook grew past $2.4bn, guidance tightened to 6.375%. Final pricing cleared at 6.20% on peak demand of roughly $2.8bn, an oversubscription of more than 5.5 times. The notes priced at a 40 basis-point spread over the South African sovereign curve, among the tightest differentials recorded for a sub-investment-grade corporate from the country.

The transaction demonstrated that South Africa’s corporate credit can still clear at competitive levels even in a high-rate, risk-selective global environment. It also marked the first major non-mining USD-denominated corporate eurobond from South Africa since 2023, underscoring the ability of an industrial issuer to access benchmark funding offshore.

Although Bidvest’s operations are increasingly international, roughly three-quarters of its earnings are domestic, which anchors its pricing to the South African sovereign curve. For any South African issuer, the sovereign yield serves as the functional baseline, and performance is judged by how tightly the spread can compress above it. Historically, leading corporates have cleared between 80 and 200 basis points over the sovereign, but Bidvest’s 40 basis-point outcome redefined that range, signalling that investors were willing to price the company’s credit quality and execution discipline almost at a quasi-sovereign level.

Part of what drove that success was scarcity.

South African corporates access the international bond market infrequently, often no more than a few transactions each year, which creates pent-up demand among global investors for credible South African paper. When an issuer of Bidvest’s scale appears, liquidity that has been waiting for a reference point tends to converge quickly, producing the kind of oversubscription seen in this book. The demand was visible not only in volume but in the quality of orders: long-only real-money accounts that anchor pricing rather than chase yield.

Equally important was the participation of domestic investors. South African institutions have traditionally stayed peripheral to international bond placements, constrained by mandates and currency considerations. This time, several entered the book in size, bidding competitively alongside global accounts. Their involvement strengthened price tension during the build and contributed materially to the spread compression that defined the outcome. It also demonstrated that the boundary between local and offshore capital is beginning to thin, allowing African investors to influence the pricing of their own corporate risk in global markets.

It all sends a powerful message to corporates, both in South Africa and across the continent, that well-structured and well-positioned transactions can deliver exceptionally cost-effective funding solutions on terms that rival those available in developed markets. It proves that debt capital markets can serve as a highly competitive alternative to traditional lending, offering access to deep, stable pools of capital that can finance expansion, acquisition, and integration for African issuers who prepare thoroughly and communicate their credit story with precision.

As African corporates continue to expand beyond their domestic markets, sustaining access to global investors is critical. The bond market offers a scale and speed that conventional bank lending cannot always replicate, and that efficiency, combined with the depth of capital now available to disciplined issuers, positions the debt capital markets as an increasingly integral component of how Africa’s leading corporates finance long-term growth.