A challenge facing South African fixed-income investors — particularly large institutional investors such as Old Mutual Investment Group — is that at present there are not many high-quality issuers of long-dated debt. Traditionally, fixed-income investors have found investment opportunity with issuers such as large corporates, municipalities and state-owned enterprises. But market uncertainty and governance issues mean that opportunities are few and far between, particularly in state-owned enterprises and at municipal level. SA has eight metropolitan municipalities, 44 district municipalities and 205 local municipalities. Only four metropolitan municipalities are considered investment grade. With the fiscus under strain, how will inclusive growth and service delivery be funded? Green bonds may inject some confidence back into the fixed-income market at the level of state-owned enterprises and municipalities. They are fixed-income financial instruments with proceeds ring-fenced for t...
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