Nedbank Group Ltd. (NED) may raise 4 billion rand ($488 million) or more with a first-of-its-kind retail bond to help finance more than a third of the wind and solar plants planned in South Africa.
The proceeds of the so-called green savings bond, which will pay a rate of as much as 7.5 percent, will be dedicated to renewable-energy funding, Anton de Wet, managing executive of client engagement at South Africa’s fourth-largest lender, said in a speech today in Johannesburg, where the bank is based.
The nation is expanding power generation after Eskom Holdings SOC Ltd., the utility that provides 95 percent of its electricity, mainly by burning coal, suffered shortages in 2008 that temporarily idled mines. Nedbank, which is offering private individuals access to notes at prices typically offered to large funds, is funding 37 percent of the first phase of the nation’s renewable-energy program and expects to raise this to 39 percent in the second. The total value of the program may be 120 billion rand.
“Our pricing is essentially what we almost pay an institutional investor, so retail clients have access to institutional rates through this type of instrument,” Paul Bowes, head of group funding and strategic liquidity management, said in an interview. The notes will pay interest from 5.87 percent to 7.5 percent monthly or semi-annually, depending on the period invested and investors’ age, he said.
“Particularly in this low interest-rate environment, one is certainly looking for yield,” he said.
South Africa’s benchmark lending rate is 5.5 percent, a 30- year low. Yields on South Africa’s rand-denominated bonds due 2021 have dropped 87 basis points this year to 7.10 percent as of 2:39 p.m. in Johannesburg. The yield touched a record low of 7.095 percent on July 5.
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