SIMON BROWN: I’m chatting to Lyle Sanker. He’s head of fixed income at PSG Asset Management. Lyle, I appreciate the time today.
On the other hand, government bonds, which were primed for good performance this year, have underperformed the cash market and yield is now set close to 12% on average, and I think that’s sort of the backdrop that we are looking at. LYLE SANKAR: I think that’s exactly our view on this. Firstly, even though they are government bonds, you want to make sure you invest in [them] when there’s a low likelihood of losing capital. And I think those two scenarios typically are where things go wrong. So on the inflation front we are not going to experience inflation like in Turkey or even in the developed markets, where inflation is still quite a problem.
For example, South Africa has only 15% of its debt maturing in the next couple of years. What that does is it slows the pace at which your interest will starts to ratchet up. Obviously, we are now issuing bonds at much higher levels than in the past, but that also gives you time to sort out, I guess, the key constraint, which is energy.