Search for yield props up bond market
Effects of political tension propped up the country's bond market as investors piled into government debt this week
The effects of political tension - the catalyst for South Africa's credit-ratings downgrades a week ago - propped up the country's bond market as investors piled into government debt this week. The downgrade to junk status increased the yield on South Africa's debt raising the government's borrowing costs. The rand traded firmer this week - a direct result of foreign investors buying into the currency via bonds. The yield on the R186 benchmark 10-year government bond firmed to below 9% after the sell-off that began on March 27, the Monday after former finance minister Pravin Gordhan was fired. Experts believe the turmoil in other emerging markets and waning expectations for growth-inducing policies from US President Donald Trump have supported continued interest in local assets. Jack Deino, head of emerging markets: corporate debt investments at BlackRock, said on Tuesday that South Africa experienced a level of fiscal deterioration similar to that of Brazil, which slid fully int...
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