S. Africa’s IDC Plans to Sell up to 5 Billion Rand Bonds in Year

Industrial Development Corp., South Africa’s state-owned development financier, plans to issue as much as 5 billion rand ($553 million) in local-currency bonds in the year to March, Chief Financial Officer Gert Gouws said.

“We could issue 4 to 5 billion rand in 1 billion-rand increments,” Gouws said in an interview in Cape Town today.

South Africa, which has the world’s biggest known reserves of platinum and chrome and is the continent’s largest producer of gold and iron ore, wants more minerals to be processed locally to boost the economy and create jobs, with the IDC supporting projects that promote this. The company owns 7.9 percent of ArcelorMittal South Africa Ltd., the continent’s biggest steelmaker, and a 21.9 percent stake in iron-ore producer Merafe Resources Ltd.

President Jacob Zuma has set a goal to reduce the jobless rate in the continent’s biggest economy to 14 percent by 2020 from 25.2 percent in the first quarter. Economic growth will probably reach 2.6 percent this year, less than half the 7 percent pace the government estimates it needs to meet the jobs pledge.

The rand has depreciated 6.4 percent against the dollar this year, the worst performance among the 24 major emerging-market currencies tracked by Bloomberg. Its three-month implied volatility against the dollar declined 7.5 basis points, or 0.075 percentage point, to 12.575 percent, indicating that options traders see smaller swings in the currency in coming months. Still, it’s the highest of all major currencies tracked by Bloomberg.

“The weaker rand contributed positively to our mining and beneficiation clients,” Gouws said. Volatility in the currency “causes anxiety in the heart and minds of many of our clients. It contributes to uncertainty. It increases the levels of complexity of doing business.”

The rand slipped 0.2 percent to 9.0487 per dollar by 10:29 a.m. in Johannesburg.

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