As Finance Minister Tito Mboweni began addressing Parliament, the yield on the benchmark 10-year bond was fetching 9.285%, up about six basis points on the day, according to Investing.com data. It then spiked to 9.415% as he spoke, before settling back to 9.28% as his 50-minute speech wound down. The Rand also lost ground against the dollar, stumbling from 16.38/dlr to 16.4775 – a one-week low.
The JSE Top-40 index extended losses on the day to be 2.6% lower, but that was probably as much a function as a downturn in global stock markets rattled by surges in Covid-19 cases in key markets such as the US. : “The spike in South Africa’s bond yield is indicative of investors’ belief that the South African government will struggle to control debt, despite Mboweni’s promises. The government has been kicking the can down the road with regards to needed economic reforms, meaning that it is likely to hit 100% debt-to-GDP ratio by 2025, and it may even rise above 100%.
There had been hopes that the government would reduce its domestic debt issuance this year, but that is no longer the case.