Bonds track weaker rand as focus remains squarely on ratings agencies
South African bonds were slightly softer on Friday afternoon, as investors waited for Moody’s and SP Global Ratings to deliver their long-awaited views on the creditworthiness of SA’s sovereign debt. The announcement, expected late on Friday, had kept a lid on market activity, analysts said. This was compounded by markets in the US being closed on Thursday, with Friday a half-working day in that country. A rumour was circulating within the market on Friday that S&P would cut SA’s local currency rating to junk, while Moody’s will keep its rating unchanged until next year. Fears that bond yields could jump sharply and that the rand could sell off if Moody’s and S&P cut SA’s local currency debt to junk status looked a bit overblown, said Capital Economics analysts. Much of the bad news already appeared to be priced into the market. Bonds showed little reaction to Thursday’s Reserve Bank decision to keep interest rates unchanged, despite the forecast that rates could rise a cumulative 7...
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