Rand, bonds soften on Moody’s fears
Downgrade possible within weeks with analysts expecting a one-notch cut
Reports that Moody’s could downgrade SA’s credit rating sooner than expected weakened the rand and sent bond yields higher on Tuesday, as market participants worried that a negative rating action would spark a selloff in bonds. Buoyed by stocks that benefit from a weaker rand, the JSE hit a 10-month high, closing the day 0.89% higher at 54172.76 points. Nomura analyst Peter Attard Montalto said there was a possibility that Moody’s might downgrade the country in coming weeks without a visit. The original view was that Moody’s analysts would visit SA towards the end of May and then report during June, he said. The rand weakened from R13.6135 to R13.7095 to the dollar in early morning trade. It was also under pressure from a stronger greenback, bolstered by upbeat views on the US economy. The local currency recovered to R13.5711 to the dollar in early evening trade. The yield on the benchmark R186 10-year government bond rose to 8.81% from Monday’s 8.715%. This moderated to 8.78% in ea...
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