All data is delayed
See More

Nene: Borrowing cost stable

Oct 31 2012 17:29
Parliament - The cost of borrowing has remained stable over the past month, Deputy Finance Minister Nhlanhla Nene said on Wednesday.

Replying to questions in the National Assembly, Nene could not quantify the exact impact of downgrades by ratings agencies Moody's, and Standard and Poor's, on the fiscus.

He said a number of global and domestic factors meant it would be difficult to determine precise figures.

"High levels of global liquidity, low returns in developed countries... domestic factors such as wildcat strikes and electricity constraints may have affected the performance of important market indicators such as the currency and equity markets," said Nene.

Democratic Alliance MP Tim Harris said he did his own "back of the envelope calculation".

"We issued R21bn worth of debt yesterday... If the downgrade cost us 20 basis points that would increase our debt repayment by R60m," said Harris.

Nene countered with what he called "front envelope calculations".

"The foreign flows, net bond purchases by foreigners since the Moody's downgrade have totalled R9.5bn.

"This has been a net sale of R6.8bn worth of equities," said Nene.

Nene said Treasury calculations showed the cost of borrowing for government had not seen any major moves.

"The cost of borrowing foreign currency has also increased somewhat at a much smaller margin of 0.1 percentage points," said Nene.

Asked what he expected from ratings agency Fitch, who was expected only do its grading after the ANC's elective conference in December, Nene predicted an upgrade.
nhlanhla nene



Read Fin24’s Comments Policy publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
Comments have been closed for this article.

Company Snapshot

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...

Voting Booth

What do you want Finance Minister Pravin Gordhan to address during his budget speech?

Previous results · Suggest a vote