The National Treasury has launched a new infrastructure and development finance bond, which will be issued to the market under government’s domestic borrowing programme.

This is part of a suite of reforms, first outlined in the 2024 Medium-Term Budget Policy Statement (MTBPS), to boost investment in the infrastructure needed to foster stronger economic growth and service delivery, including by developing new long-term financing instruments.

Treasury points out that this is the first time government has issued an infrastructure bond, noting that it aims to take advantage of investors’ appetite for infrastructure as an asset class to raise funding at favourable market rates.

“Raising the level of public infrastructure investment remains central to South Africa’s long-term growth strategy,” it notes in a media release.

As outlined in the 2025 MTBPS, government is shifting the composition of expenditure from consumption toward investment, supported by the reconfigured Budget Facility for Infrastructure (BFI), which now operates four bid windows yearly.

In its first two quarters, the reconfigured BFI received 28 submissions with nine having progressed to detailed appraisal.

Treasury says the introduction of the new bond forms part of government’s strategy to broaden available funding mechanisms to improve the efficiency of capital allocation and enhance transparency in the financing of large-scale public investment.

It explains that proceeds from the bond will be earmarked exclusively for financing eligible BFI projects. These include critical energy, water, transport and social infrastructure investments that have undergone rigorous technical and financial evaluation.

Treasury says the funds will be disbursed through the Infrastructure Fund in the Development Bank of Southern Africa, to ensure outlays are made in line with project delivery milestones.

To support these projects, Treasury says, it will issue the bond to mobilise a minimum of R15-billion, with the potential to upsize this depending on prevailing market conditions and investor demand.

It notes that the issuance aligns with government’s debt management strategy, which aims to deepen and diversify the domestic capital market; lower the long-term cost of borrowing; and ensure predictable and transparent funding conditions.

Absa Bank, in partnership with Tysys Capital Group, have been appointed as co-arrangers for the transaction.