South African bonds were marginally softer despite a firmer rand shortly before midday on Tuesday, as markets processed the increasing political risk as SA faces ratings agency decisions on November 24. Events this week have been seen to have increased the prospect that ratings agencies Moody’s and S&P will downgrade SA’s sovereign credit ratings, notably talk of an additional R40bn line item to the budget in the form of a free-education plan. Both the rand and the benchmark R186 hit their worst levels so far in 2017 on Monday, but pulled back in late trade. Reports also emerged on Tuesday that power utility Eskom was on the brink of running out of cash to fund its operations. Michael Sachs resigned as the Treasury’s deputy-director general in the budget office, on Monday — the same day as the release of the Heher commission’s report on funding tertiary education. Sasfin fixed-income trader Alvin Chawasema said concern that the institutional strength was being eroded at an alarming ...
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