Moody’s flags interest rates on government borrowing
Lead sovereign analyst Lucie Villa warns SA’s debt will continue to rise amid sustained high rates
The sustained high interest rates faced by the government means that SA’s debt will continue to rise and the fiscal deficit will be slowly reduced only in the medium term, Moody’s Investors Service lead sovereign analyst Lucie Villa told a webinar on Tuesday.
SA government bond yields are at their highest since the 1980s in real terms. The SA 10-year government bond had a yield of 9.49% on Tuesday. While inflation has come down, the yield has stayed among the highest even for emerging markets, and compares to just 1.65% for US treasuries with a similar maturity. The gap implies that investors have placed a high risk premium on lending to SA. Two year notes yielded 4.81%. ..