Government raises R2.4bn in over-subscribed weekly bond auction

The government debt attracted a demand from investors on Tuesday despite the uncertainty regarding the future of finance minister Nhlanhla Nene.

Nene has offered to quit over the undisclosed meetings he had with the controversial Gupta family, which stands accused of, among other things, wielding undue influence in the awarding of state contracts during the former president Jacob Zuma era.

The storm around Nene comes just two weeks before he is due to the deliver medium-term budget policy statement, which ratings agencies and investors alike will monitor closely if it sticks to the fiscal discipline.

However, institutional investors showed an appetite for government debt on Tuesday as the Treasury managed to raise R2.4bn in an over-subscribed offer.

“The auction was well supported under the circumstances and was almost three-times subscribed as bids totaling R7.04bn were recorded for the R2.4bn nominal on offer,” said Ashley Dickinson, head of fixed income dealing Sasfin Wealth.

“Treasury placed the full allocation of R800m in each of the three bonds on offer and despite the uncertain environment the bonds cleared at, or better than fair value — being the yields at the time the auction closed for bidding.”

The rand, meanwhile, hit R15 to the dollar for first time in three weeks, hit in part by a strong dollar, which exerted pressure on broader emerging markets.