The SA Reserve Bank (SARB) signed a loan agreement with a group of foreign banks on Monday, in terms of which it will borrow $1.5-billion (about R9.9-billion) to settle an earlier, more expensive debt.

The agreement, with a grouping of 33 banks from countries like Germany, the United Kingdom, the United States, Japan and France, was done in two tranches, said the central bank's head of financial markets, Daniel Mminele.

It would see the bank borrowing the first $1-billion over three years and the rest over five.

He said the central bank was taking advantage of South Africa's increased credit-worthiness and good market conditions to obtain the loan at good terms. The loan did not represent any new borrowing.

The money would be used to repay an earlier loan obtained from a similar group of banks in 2002 and 2003, which had become more expensive to service. The terms and conditions of the earlier loan were more expensive and did not take into account South Africa's improved international credit rating.

Mminele said the refinancing of the earlier loan was happening early. The part of the loan obtained in 2002 was to have matured in 2007 and that of 2003 next year.

In a prepared speech, SARB governor Tito Mboweni said the loan pricing structure bore testimony to South Africa's prudent macro-economic policies and its social and political stability.

"The confidence each financial institution has displayed in South Africa by committing to this loan contributes to enhancing South Africa's international profile," he said on signing the deal in London.

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