Treasury will soon find out how much a widening deficit will cost SA
Tuesday marks SA’s biggest local-currency bond auction to date, and while a failed auction is highly unlikely, yields could spike
SA’s widening budget deficit is going to cost it. Just how much, Treasury will find out when it holds its biggest auction yet of local-currency debt on Tuesday. Benchmark 10-year yields have climbed more than 60 basis points since October 24, the day before Finance Minister Malusi Gigaba said the government would need to raise an additional R122bn of debt over the next three years to plug a yawning fiscal shortfall. That means increasing the amount of notes offered at the weekly fixed-rate auction to R3.3bn going forward, from R2.65bn previously. With Moody’s Investors Service and S&P Global Ratings preparing to review SA’s credit assessments next week, investors are already on edge. To make matters worse, 10-year yields jumped on Monday to their highest since 2016 after the head of the Treasury’s budget office, Michael Sachs, resigned amid speculation that President Jacob Zuma is plotting to override the Treasury to implement a costly plan for free university education. While a fai...
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Subscribe now to unlock this article.
Support BusinessLIVE’s award-winning journalism for R129 per month (digital access only).
There’s never been a more important time to support independent journalism in SA. Our subscription packages now offer an ad-free experience for readers.
Cancel anytime.
Questions? Email helpdesk@businesslive.co.za or call 0860 52 52 00. Got a subscription voucher? Redeem it now.