The bond market was weaker on Thursday afternoon as the implications of the finance minister’s removal continued to play out. The dismissal of Pravin Gordhan led to the downgrade of SA’s foreign-currency-denominated debt by S&P Global Ratings. Also, due to the direct and indirect effects sovereign distress will have on banks’ operations, S&P also lowered its rating on FirstRand‚ Nedbank‚ Investec‚ Absa‚ Barclays Africa and BNP Paribas Personal Finance‚ citing a negative outlook as a result of political and institutional uncertainty. Earlier this week‚ when S&P’s downgrade took effect, the yield on the R186 bond was dragged through the 9% mark. The South African Reserve Bank (SARB) said while S&P lowered the ratings of the commercial banks to subinvestment grade, they were adequately capitalised to deal with the effects of a cut to junk. "The resilience of the banks stems from the high capital buffers that prevail in the South African banking system." The Bank said that overall, SA’s...
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