JOHANNESBURG, Sept 26 (Reuters) – South African government
bond yields fell to new lows on Wednesday as the country’s bond
market is set to become the first in Africa to join Citi’s
influential World Government Bond Index on Oct. 1.
Africa’s biggest economy will become the 23rd member of the
WGBI. There will be 12 South African government bonds included,
with a market value of $93.82 billion, representing 0.45 percent
of the index, Citi said on Wednesday.
Mexico, Malaysia, Singapore and Poland are the four other
emerging market countries in the index.
The yield on South Africa’s 2015 and 2021
bonds fell to record lows of 5.295 percent and 6.44
percent respectively.
Analysts said bonds are likely to be supported by inflows
from offshore investors who previously had no exposure to South
African government debt.
“We’re expecting there will be some passive inflows as a
result of index trackers that are having to increase their
weighting,” said Michael Grobler, fixed income analyst at
Afrifocus Securities. “We think we’ve seen anything between 55
and 70 percent of WGBI-related inflows that has already been
deployed.”
Market anticipation of the WGBI inclusion and the absence of
any local data releases helped keep the rand stable against the
dollar.
It was trading at 8.2350 to the dollar at 1607 GMT,
unchanged from Tuesday’s close.
(Reporting by Tosin Sulaiman; editing by Ron Askew)
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