Bonds weaker as investors await S&P verdict

South African government bonds were slightly softer on Friday morning, tracking the weaker rand, but with domestic focus on S&P Global Ratings’ decision at midnight.

In its previous assessment in November, S&P had kept SA’s debt at junk status, but changed its outlook from negative to stable, implying that no further downgrade was expected, analysts said.

“The recent substantive appointments and measures taken in the state owned enterprises space point to an administration that is making earnest efforts to arrest the deterioration [of the fiscus], and this coupled with the improvement in GDP forecasts bodes well for the rating outlook,” said Sasfin Securities bond analysts.

The dollar on Friday was slightly buoyant, with the greenback and Asian and European equity markets brushing off news of a cancelled summit between the US and North Korea.

At 10am, the benchmark R186 government bond was bid at 8.475% from 8.435% and the R207 at an unchanged 7.255%.

The rand was at R12.5073 to the dollar from R12.4218.

The US 10-year treasury was at 2.9706% from 2.9926%.