Orders jump at South Africa bond auction as investors see value

South Africa just had its strongest bond auction since March, a sign investors are seeing value in the country’s debt after a sell-off sparked by Turkey’s currency woes.

Traders placed R9.77 billion ($694 million) of orders, or more than four times the R2.4 billion of securities on sale, at the scheduled weekly Treasury auction on Tuesday, according to data published by the central bank.

South African yields surged to two-month highs on Monday as Turkey’s currency meltdown sapped demand for emerging-market assets. Rates on benchmark 2026 government notes climbed to 9.02%, the highest among investment-rated peers, attracting local buyers even as foreign investors dumped the debt at the fastest rate since June. Nine South Africa-based primary dealers participate in the weekly auctions.

“The auction cleared strong today as investors took advantage of higher yields to add risk to their portfolios,” said Michelle Wohlberg, a trader at FirstRand Bank in Johannesburg. “Local investors are seeing this as a perfect opportunity to buy bonds at attractive yields, as the panic seen yesterday is perceived as slightly overdone.”

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