The South African bond market remains vulnerable to the country’s weak fundamentals

SOUTH AFRICA - Report 13 Apr 2021 by Iraj Abedian

Yields on South African bonds have been particularly volatile since March 2020 largely on the back of the Covid-19 pandemic and the country losing its last investment grade credit rating from a major rating agency, further downgrades, and the subsequent non-resident net sales of bonds. Moreover, the Treasury had indicated in Budget 2020 that tax revenue for the FY2019/20 had been revised down by R10.7 billion from the 2019 Medium Term Budget Policy Statement (MTBPS), while the MTBPS revenue forecast too was a downward revision from Budget 2019 by a substantial R52.5 billion, while debt kept mounting, which further highlighted the weak state of the fiscus.

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