South Africa Sells Islamic Bonds at Record-Low Borrowing Cost

South Africa sold its first ever Shariah-compliant bonds at a record-low borrowing cost, opening the way for state-owned companies to tap a growing Muslim investor base. The $500 million of 5.75-year securities were priced with a coupon of 3.9 percent, at the bottom end of the range marketed to asset managers. Fifty-nine percent of investors participating in the deal were from the Middle East. The sale is likely to prompt more African nations and companies to follow. Eskom Holdings SOC Ltd., South Africa’s state-owned electricity company, and Transnet SOC Ltd., the ports and railways operator, have said they may tap the Islamic finance market. BNP Paribas SA, KFH Investment and Standard Bank Group Ltd. arranged the sale.