One of South Africa's biggest financial institutions is borrowing $1bn from a group of Chinese banks in a move which reflects the scarcity of credit in traditional capital markets and growing links between South Africa and bigger emerging economies.
Standard Bank, which sold 20 per cent of its equity to Industrial and Commercial Bank of China two years ago, said it was the first time that it had tapped the Asian market.
"There is absolutely no way we could raise this kind of money from western banks," said Jacko Maree, Standard Bank's chief executive.
"You could not do it at any price."
Standard, like other South African banks has been increasingly focusing its business on Asia and other emerging markets in the wake of last year's financial crisis.
Although markets are becoming more liquid in the wake of the reduction of interest rates to record lows, banks are still reluctant to offer longer-term financing.
China has been less damaged by the crisis, however, and its financial institutions are more prepared to lend.
Mr Maree said that terms of the deal agreed with the group - which includes Bank of China, China Development Bank, and China Citic Bank, as well as ICBC - were more attractive than those that would have been available from European or US banks, although he would not disclose details of pricing.
At five years the term of the loan is also longer than anything on offer in the west.
Mr Maree said the money had not been earmarked, although it will help Standard fund the growing activities of Chinese and South African corporates elsewhere in Africa.
Standard has already co-operated with ICBC in funding a large power plant in Botswana and similar kinds of infrastructure projects were being examined elsewhere in the continent.
Among South African corporates, the bank is not alone in emphasising its links with Asia.
FirstRand, the financial services group, recently agreed a strategic alliance with a Chinese partner and has also attached much greater importance to its ability to its clients' ties with the Indian market.
MTN, the telecommunications group, is in discussions with Bharti Airtel, the Indian telecoms group, over a cross shareholder agreement that would allow the two groups better to exploit potential in rapidly growing markets in Africa and the Middle East.
The two groups are committed to finalise negotiations over a deal that could be worth $24bn by the end of this month.
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Source: Factiva Article 1920
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