Share

Foreign holdings of SA debt lowest in nearly two years

Foreign ownership of South African government debt is declining, but that’s not necessarily a bad thing.

Non-resident holdings of the country’s bonds dropped to 38% at the end of December, from a high of 43% in March, according to National Treasury data.

Africa’s most-industrialised economy relies on portfolio inflows to help finance a persistent current-account deficit.

Foreigners have been more than happy, historically, to buy in as real rates on South African government debt are attractive – among the highest in investment-rated developing nations.

But significant foreign ownership has also meant that any risk event can quickly turn inflows into outflows, as seen last year. Foreigners sold a net R57.5bn of the debt in 2018, the most in a year since Bloomberg started compiling the data in 1996.

The good news is that lighter foreigner positioning provides a buffer to the risk of a downgrade by Moody’s, according to Guillaume Tresca, a senior emerging market strategist at Credit Agricole, in a note to clients.

Moody’s is scheduled to reassess the country’s credit rating at the end of the first quarter, and again in November. It’s the only major rating agency that still has South Africa at investment grade.

A drop into junk could lead to the exclusion of South Africa from Citigroup’s World Government Bond Index and to an estimated $6bn (about R82bn) to $7bn (about R96bn) of outflows, Tresca said.

We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Rand - Dollar
18.89
+0.2%
Rand - Pound
23.84
+0.3%
Rand - Euro
20.38
+0.2%
Rand - Aus dollar
12.31
+0.2%
Rand - Yen
0.12
+0.2%
Platinum
908.05
0.0%
Palladium
1,014.94
0.0%
Gold
2,232.75
-0.0%
Silver
24.95
-0.1%
Brent Crude
87.00
+1.8%
Top 40
68,346
0.0%
All Share
74,536
0.0%
Resource 10
57,251
0.0%
Industrial 25
103,936
0.0%
Financial 15
16,502
0.0%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders