Wholly owned by the government of South Africa, the DBSA raises debt funding from multiple sources, including local and international financial institutions, and fund managers. In recognition of the potential risks inherent in its development financing role, the Bank is conservatively geared, with a regulatory gearing cap of 2.5 times capital. With a capital structure along the lines of those of the global and regional multilateral development banks, the DBSA’s on-balance sheet capital is bolstered by callable capital amounting to ZAR 20 billion.
The overarching objective of the DBSA’s borrowing programme is to raise funds at the lowest cost and price volatility possible, to enable the same to be extended to the critical infrastructure development financed by the Bank. To this extent the Bank seeks to diversify its funding sources as far as possible, balancing debt market issuance across various tenors, with bilateral loan facilities from banks as well as multilateral and bilateral development finance institutions.
Debt funding is used solely to fund the Bank’s development finance operations. All funds raised, therefore, contribute directly to the development outcomes pursued through DBSA financing. Aligned with this, and given the rapid expansion and growing importance of the ‘use of proceeds’ bond markets, the DBSA is intent on developing appropriate and market aligned issuance frameworks to tap both the dedicated impact investor universe, and to provide its established investor base with more direct see-through to the underlying development funded by the Bank. The first of these is the Bank’s Green Bond Framework, with one or more broader, sustainable development bond frameworks to follow in due course.