Moody’s ‘Reprieve’ Prompts Short-Term Boost For South African Markets

Reuters

South Africa’s dollar-denominated sovereign bonds jumped and yields of the local 10-year benchmark eased on Monday after Pretoria escaped a relegation to “junk” status by ratings agency Moody’s in the wake of last week’s bleak mid-term budget.

The rand saw its largest daily fall in more than a year on Wednesday, after Finance Minister Tito Mboweni’s medium-term budget statement slashed this year’s growth forecast to 0.5% and showed government debt racing to more than 70% of gross domestic product (GDP) by 2023.

The rand was still around 1% weaker against the dollar on Monday than it had been before the medium-term budget, and benchmark local government debt yields were still some 20 basis points higher.

Local bond yields eased across the curve with the 10-year benchmark yield slipping to 8.4%, a 18 basis points decline from the Friday close, according to Refinitiv data.

Meanwhile, longer-dated Eurobonds bonds enjoyed the