Bonds steady as market eyes size of Eskom bailout
Analysts says risks to the fiscus posed by Eskom have now seemingly been priced in by the market
The rand and local bonds held steady at one-week lows on Tuesday as investors await the budget policy statement on Wednesday. At 5pm on Tuesday, the rand was 0.2% weaker at R14.14/$; 0.29% weaker at R16/€; and 0.7% weaker at R18.37/£. The R186 10-year bond was bid at 8.9%, 0.5% weaker than Monday’s close of 8.855%. Both the rand and local bonds weakened sharply last week, as load-shedding and headlines around Eskom’s debt mountain gripped the market. But much of the risk posed by Eskom’s financial problems, in particular, and government overspending more generally, have now seemingly been priced into the market, analysts said. The rand fell to a six-week low against the dollar last week as investors digested news that the government intends to split Eskom into three separate entities. The benchmark R186 government bond due in 2026 came under pressure after ratings agency Moody’s Investors Service warned that this plan could be difficult to implement. Bonds could rally on Wednesday i...
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