South African government bonds jump

South African government bonds jumped on Wednesday, after the central bank said it would begin buying government debt as part of emergency measures to ease a liquidity crunch linked to the global coronavirus pandemic.

Read: Sarb starts buying bonds to inject emergency cash

The yield on the 2030 government bond plunged 118 basis points to 11.175% by 0810 GMT, while the rand traded around 0.7% stronger at 17.40 to the US dollar.

The South African Reserve Bank said there was no predetermined amount for the bond purchases.

South Africa will enter a 21-day lockdown starting at midnight on Thursday to try to contain the coronavirus, with confirmed cases rising to 709 on Wednesday, the most in sub-Saharan Africa.

The lockdown will pile added pressure on an economy that is already in recession and where roughly 30% of the population is unemployed.

Some analysts expect Moody’s to cut South Africa’s last investment-grade credit rating to “junk” on Friday when it is due to conduct a rating review.

South Africa is currently on a ‘Baa3’ rating with a “negative” outlook.

The Johannesburg Stock Exchange’s Top-40 index was up 4.7% and the broader All-Share Index gained 4.7%, with the mining sector up 6%.