Bonds weaken sharply as Malusi Gigaba discloses deteriorating fiscal position
South African bonds slumped on Wednesday afternoon, as the market reacted negatively to the projections for a higher budget deficit and lower growth for the next three years, unveiled by Finance Minister Malusi Gigaba in the medium-term budget policy statement. Bonds tracked the weaker rand, which hit its worst level in 10 months — R13.9942 to the dollar — during Gigaba’s speech. Bonds also weakened as Gigaba spoke, with the R186 reaching 8.9% from 8.86%, and were relatively steady one hour into Gigaba’s speech before weakening quickly after the numbers reflected a deteriorating fiscal position. At 3.11pm the benchmark R186 was bid at 9.1% from 8.835% and the R207 at 7.735% from 7.49%. By 5pm the R186 had weakened further, quoted at 9.18%. The rand was at R13.9439 to the dollar from R13.7691. Projected GDP growth for 2017, forecast at 1.3% at the time of the February budget policy statement, has been revised down to 0.7%. Gigaba said the consolidated budget deficit would widen to 4....
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