Money SA economy
The government has created some much needed breathing room at the top end of the local bond market after launching two new long bonds.
And the assessment from the market is that the issuance has received plenty of interest from asset managers running annuity books, with the demand a clear thumbs up as to the health of the debt market at a time when global markets languish.
The 2031 R213 was launched last week, while the 2041 hit the market yesterday at a yield of 8.82%.
Victor Mphaphuli, a bond analyst and portfolio manager at Stanlib, says this yield is competitive, as it is 8-9 points through [stronger than] the 2036 R209 bond.
The R209 is a good comparator to use as it matures in 2036 and was last yielding 8.89%.
Mphaphuli's boss at Stanlib, the top ranked Henk Viljoen, says the launch of these bonds is significant, coming at a time when other countries are issuing 20 year debt simply to help pay salaries. "It is quite significant for liquidity players looking to hold as long a portfolio as possible."
Net purchases of SA bonds by foreigners including repurchase agreements for 2010 in the year to date is R26.163 billion, while in 2009 foreigners were net sellers of bonds including repurchase agreements of R2.424 billion.
But the key feature now of the local bond market is that the entire curve has normalized, with shorter-term paper yielding around 6.5%, 10-year paper around 8% and further out, 9%.
