South African bonds were weaker on Tuesday afternoon as the market geared up for Thursday’s interest-rate decision by the Reserve Bank, and the result of recent ratings reviews by S&P Global and Moody’s on Friday. The range-bound rand provided little direction to the market, while US bond yields fell after the dollar made little headway against the euro on the day. Old Mutual Investment group portfolio manager Graham Tucker said a downgrade could have real negative consequences, particularly if SA were removed from the global bond benchmark indices. He said passive investors would be required to disinvest in the local fixed-income market, leading to significant foreign selling of South African bonds within a short period of time, thereby driving yields higher. This would, in turn, put pressure on the currency and could lead to a significant depreciation in the rand. "But I wouldn’t be surprised to see them find a ceiling, in terms of yield, or even strengthen somewhat after the sell...
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