Bonds slightly firmer ahead of rate decision and possible downgrade
South African bonds were slightly firmer at midday on Thursday ahead of the Reserve Bank’s interest-rate decision, expected shortly after 3pm. Trade was subdued, with no change in rates expected. Volumes were low due to the US Thanksgiving holiday and Labour Day in Japan. The market is preparing for Friday night’s big event, when rating agencies Moody’s and S&P are due to announce the outcome of their credit ratings review. Local bonds have held steady this week on the possibility that a downgrade might only occur following the ANC’s elective conference in December, or the budget in February 2018. Ashburton Investments fixed-income analysts said their base view was that the agencies might pause on a downgrade until after February. However, the downgrade seems to have been mostly priced in, "but we would not be surprised if the R186 experienced a further sharp sell-off to 9.85%, before recovering again", they said. At 11.33am, the R186 was bid at 9.37% from 9.39% and the R207 was at ...
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