Transnet’s oversubscribed auction caps a strong quarter for listed credit

Strong issuance in South Africa’s Debt Capital Market continued in Q4 2025, with issuance rising to R50 billion (Q3: R53 billion) amid strong demand and spread compression. The most noteworthy auction was that of Transnet which attracted R42 billion of bids resulting in 8x oversubscription and significant spread compression.

Primary market overview

Approximately R50 billion of gross term issuance was recorded in the fourth quarter of 2025, slightly behind the R53 billion issued in the prior quarter. In line with the trend over the year, banks and financial services dominated the quarter’s issuance at R22 billion, followed by corporates at R13 billion, state-owned enterprises (SOEs) at R12 billion and securitisations at R4 billion. For the third consecutive year, municipalities remained absent from the debt capital market.

The trend of auction oversubscription and spread compression continued due to a continuation of the following factors: strong and growing demand for primary market issuance; the supply side not growing sufficiently to meet this demand; less attractive pick-up offered by alternatives such as government floaters; banks being aggressive bidders in certain corporate auctions; and the improving fundamental credit strength of issuers.

Bank issuance and spreads 

All of the “big five” banks – Absa Bank Limited (Absa), Nedbank Limited (Nedbank), FirstRand Bank Limited (FirstRand), The Standard Bank of South Africa Limited (Standard Bank), Investec Bank Limited (Investec) – came to market in the last quarter of the year, issuing a combination of senior and subordinated debt instruments. Investec raised R3.1 billion of senior and AT1 debt via private placement. Nedbank was the only other bank to issue via private placement in the quarter, raising R2.5 billion of Tier 2 debt. All other bank issuances occurred via auction. Demand remained resilient, evidenced by auction oversubscription rates consistently around 2x. Since the last senior issuance in the third quarter, the issue spread on the 3-year floating rate note (FRN) compressed by three basis points (bps) to 79bps over 3-month JIBAR; the 5-year note issue spread compressed by 5bps to 93bps; and the 7-year note issue spread compressed by 8bps to 102bps.

Non-bank financial issuance

In the non-bank financial sector, Liberty Group Limited and Santam Limited issued subordinated debt via auction. Strong demand was reflected in subscription ratios over 2x. Liberty was the last insurer of the year to issue 5-year subordinated debt which cleared at 118bps over 3-month JIBAR: this reflected a 6bps compression since the year’s first issuance of 5-year subordinated debt in the second quarter.

Corporate issuers

Pepkor Holdings Limited, Woolworths Holdings Limited and MTN Holdings Limited placed R3.6 billion of debt via private placement during the quarter. Bidvestco Limited, Daimler Truck Southern Africa, MTN Holdings Limited and Toyota Financial Services (SA) Limited raised R7.4 billion of debt via auction. Similarly to banks, auctions were oversubscribed by over 1.8x on average. Daimler’s 3-year note cleared at 75bps over 3-month JIBAR – 3bps tighter than its June issuance. Toyota’s issue spreads tightened from its July issuance, tightening by 3bps and 1bps across the 3- and 5-year tenors; and the 3- and 5-year notes cleared at 74bps and 93bps over 3-month JIBAR, respectively. The issue spreads across MTN’s notes also tightened since its earlier issuance in the year, with compression of 8bps, 3bps and 12bps across the 3-, 5- and 7-year tenors, respectively.

REIT sector activity

In the Real Estate Investment Trust (REIT) sector, Octodec Investments Limited privately placed R0.2 billion via a 3-year FRN at 175bps over 3-month JIBAR. This was 15bps tighter than its February issuance. Equites Property Fund Limited raised R0.5 billion through the issuance of a 5-year FRN via auction. The auction was 4.3x oversubscribed and the note cleared at 108bps over 3-month JIBAR. Resilient REIT Limited issued 3- and 5-year FRNs via auction, where the notes were oversubscribed by 7.7x and 4.0x, respectively. The 3- and 5-year notes cleared at 110bps and 120bps, respectively.

SOE issuance

Transnet’s November auction of government-guaranteed paper was well supported and attracted record volumes, with R42 billion in bid volume across 44 bidders. The auction was over 8x oversubscribed. Spreads cleared about 30-40bps below price guidance.

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Transnet raised R5 billion across 5-, 8- and 10-year FRNs and a 10-year fixed rate note. The 5-, 8- and 10-year FRNs cleared at 148bps, 168bps and 178bps over 3-month JIBAR, respectively.

The fixed rate note cleared at 105bps over R2035. Since Transnet’s R15 billion private placement of government-guaranteed debt in August, the implied spread compression for the 8-year FRN in the November auction was ca 63bps.

In the quarter, Development Bank of Southern Africa (DBSA) and Industrial Development Corporation of South Africa Limited (IDC) raised R6.9 billion of debt through a mix of auctions and private placements. As a reflection of demand, the notes issued via auction were on average 3x oversubscribed.