Non-residents’ share of government debt dropped last month to 26%, the lowest since May 2011, from a high of 43% in 2018.
The sell-off has driven yields higher, with the rate on 10-year rand bonds now almost 80 basis points above the five-year average and among the highest in emerging-markets at 10.3%. That may already be an attractive level for some foreign investors as central banks around the globe moderate the pace of monetary tightening.
Unfavourable global conditions due partly to hawkish central banks amid the fight on inflation contributed to the selloff in South African bonds, said Michelle Wohlberg, a fixed-income analyst at Firstrand Bank Ltd. “Now that the narrative has turned somewhat dovish, we’ve seen renewed interest for interest rate products from offshore investors,” she said. “But there are still a lot of moving parts driving sentiment and investment decisions.”In times of uncertainty you need journalism you can trust. For 14 free days, you can have access to a world of in-depth analyses, investigative journalism, top opinions and a range of features. Journalism strengthens democracy. Invest in the future today.