* S.Africa joins 22 countries in WGBI
* Local bonds will represent 0.45 pct of index
* Inclusion boosts bond purchases to 71 bln rand
By Stella Mapenzauswa
JOHANNESBURG, Sept 28 (Reuters) – South Africa’s debt market
should continue to benefit after it becomes the first in Africa
to be included in a prominent global bond index, a welcome boost
after violence tarnished the country’s investment reputation.
The long-awaited debut in Citigroup’s World Government Bond
Index – first announced in June but not officially effective
until Oct. 1 – puts South Africa alongside 22 other countries on
the index, tracked by an estimated $2 trillion worth of funds.
The inclusion offers some comfort to President Jacob Zuma’s
government as it reels from a wave of strikes mainly in the key
mining sector, which helped prompt a credit downgrade from
ratings agency Moody’s this week.
Twelve South African government bonds with a market value of
$93.82 billion will be included, representing 0.45 percent of
the index, Citigroup said this week.
While it is hard to pinpoint how much money fund managers
have injected into local debt ahead of Monday’s incorporation,
analysts reckon WGBI-related demand has accounted for much of
the nearly 71 billion rand ($8.67 billion) worth of bonds
purchased by foreign accounts so far this year.
Continued…
