South
Africa just had its strongest bond auction since March, a sign investors see
value in the country’s debt after a sell-off sparked by Turkey’s currency woes.
Traders
placed R9.77bn of orders, or more than four times the R2.4bn of securities on
sale, at the scheduled weekly Treasury auction on Tuesday, according to data
published by the Reserve 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 [JSE: FSR] 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.”
Yields on
2026 government securities fell eight basis points on Tuesday to 8.94%, paring
the rise in the past three trading sessions to nine points.
The bonds
have lost 11% this month in dollar terms, the worst performance after Turkish
debt, which is down 36%, according to Bloomberg Barclays indices.
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