Fortress Secures R1.6 Billion through Groundbreaking Zaronia-Linked Bond

Fortress Real Estate Investments has secured R1.6 billion via a seven-year note issuance, a first for any JSE-listed property entity to base its debt on South Africa’s newly established benchmark rate, Zaronia.

The issuance, completed under the group’s domestic medium-term note (DMTN) programme, was set at Zaronia plus 161 basis points, which equates to Jibar (Johannesburg Interbank Average Rate) plus 145 basis points when factoring in the credit adjustment spread.

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Fortress raises R1.06bn in oversubscribed debt issuance
Zaronia initiative launched to reduce reliance on Jibar

This transaction symbolizes a key moment in the local market’s shift from Jibar to the Zaronia benchmark rate.

This initiative signifies a more comprehensive transition within South Africa’s financial ecosystem, as institutions slowly embrace Zaronia as the favored benchmark for debt pricing.

Fortress noted that the recent issuance capitalizes on the strong investor interest seen in March, when it raised over R1 billion during a bond auction that garnered bids exceeding R3.7 billion.

The group’s CFO, Ian Vorster, commented that this transaction underscores sustained confidence in both Fortress and the local debt capital market.

“After our successful bond auction in March, the placement of a competitively priced seven-year unsecured note further exemplifies investor trust in Fortress and South Africa’s credit environment,” he mentioned.

Fortress share price

The funds raised will be allocated for refinancing existing debts and for general corporate uses as the group aims to enhance its funding structure and extend its debt maturity profile.

It stated that the longer term and favorable pricing align with Fortress’s strategy to bolster its engagement with capital markets while diversifying its funding sources.