News24
14 Aug 2019, 17:43 GMT+10
Investors have been dumping South African government bonds at a rate of almost R2bn a day in August.
With issuance increasing and a downgrade to junk a looming possibility, non residents have sold a net R14.4bn of the debt in August so far, according to JSE Ltd. data compiled by Bloomberg. That's an average of R1.8bn a day. The sales have wiped out inflows at a time when the country needs foreign investment to close a current-account deficit that was equivalent to 2.9% of gross domestic product in the first quarter.
The government increased the amount of local-currency debt sold at weekly auctions by 37% last week to help pay for a R128bn bailout for Eskom Holdings, the state-owned electricity company. That will push up borrowing and widen the budget deficit, placing the country's last-remaining investment-grade rating at risk. Moody's Investors Service, which rates South Africa's debt at Baa3, is reviewing its assessment in November.
Eskom needs government support to stabilise its debt - Moody's
Foreign ownership of South African government debt fell to 37.9% at the end of July, the lowest level this year, from as high as 42.8% in March 2018, according to National Treasury data. Foreigners are exiting despite yields that are among the highest in emerging markets, suggesting they're worried a downgrade to junk would see the nation's bonds kicked out of indexes that track investment-grade debt, such as Citigroup Inc.'s World Government Bond Index.
Though foreign ownership is already the lowest this year, the selloff has continued unabated. Inflows have turned into net outflows of 3.2 billion rand for the year in August - even at a time when a world awash with negative yields is fueling demand for riskier assets such as emerging-market debt.
In dollar terms, South African local-currency bonds have under-performed all major emerging markets in August except Argentina's. Yields on benchmark government securities have risen 111 basis points this month, while the rand has depreciated 5.5% against the dollar, further eroding returns for foreign investors.
Get a daily dose of Mexico Star news through our daily email, its complimentary and keeps you fully up to date with world and business news as well.
Publish news of your business, community or sports group, personnel appointments, major event and more by submitting a news release to Mexico Star.
More InformationWASHINGTON, D.C.: Filmmaker Peter Jackson's lifelong fascination with the extinct giant New Zealand flightless bird called the moa...
Shimla (Himachal Pradesh) [India], July 14 (ANI): Himachal Pradesh government has announced a relief of Rs 7 lakh per household for...
Gandhinagar (Gujarat) [India], July 14 (ANI): The state government has finalised the regulations for merging and transferring the settlements...
New Delhi [India], July 14 (ANI): President Droupadi Murmu, graced the fifth convocation ceremony of AIIMS, Bhubaneswar, at Bhubaneswar,...
Shimla (Himachal Pradesh) [India], July 14 (ANI): Amid mounting tensions over the cutting down of apple orchards on forest land, farmers...
Aizawl (Mizoram) [India], July 14 (ANI): Mizoram Home Minister K. Sapdanga on Monday declared that the Zoram People's Movement (ZPM)...
BRUSSELS, Belgium: Meta is holding firm on its controversial pay-or-consent model, a move that could lead to fresh antitrust charges...
LONDON, U.K.: American consumers and businesses could soon face the highest overall tariff burden in more than a century, according...
The family of Sayfollah Saif Musallet, a 20-year-old American citizen who was beaten to death by Israeli settlers in the occupied West...
CONCORD, New Hampshire: A federal judge in New Hampshire issued a crucial ruling on July 10 against President Donald Trump's executive...
DUBAI, U.A.E.: A cargo ship flagged under Liberia, known as the Eternity C, sank in the Red Sea following an attack executed by Yemen's...
WASHINGTON, D.C.: The Trump administration has started sending some weapons to Ukraine again, just a week after the Pentagon told officials...