South African bonds were weaker on Thursday afternoon after the Reserve Bank kept the repurchase rate unchanged at 7%. This was widely expected by the market even after inflation moderated. Statistics SA reported on Wednesday that consumer inflation for April was at 5.3% year on year‚ down from 6.1% in March. Bank governor Lesetja Kganyago said although inflation had moderated‚ the outlook for economic growth had deteriorated, with the effect of the ratings downgrades expected to weigh on domestic investment and consumer sentiment. Ratings agencies S&P Global Ratings and Fitch downgraded SA’s sovereign credit rating to junk status in April. Moody’s has not yet set a date for its decision. Kganyago said despite the two ratings downgrades, foreigners remained net buyers of domestic government bonds in April and May, to the value of R23.2bn. but said it might change should further downgrades occur. At 3.25pm the bid on the R186 was 8.525% from Wednesday’s 8.48%, and the R207 was 7.45% ...
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