Longer-dated bond yields show investor concern over SA’s long-term funding prospects

The decline in SA’s bond yields from record highs in the lead-up to the country’s ratings downgrade and the imposition of a lockdown that’s now in its ninth week does not tell the full story.

Relative calm has returned to SA markets, with 10-year yields, which move inversely to the price, back at levels seen before Moody’s Investors Service downgraded the country to junk in March. Reserve Bank governor Lesetja Kganyago noted last week that the yield curve remains “exceptionally steep”, reflecting unease about the country’s long-term borrowing needs.