Investors Undeterred as South Africa Bond Inflows Soar
- Foreigners own almost half of the country’s government debt
- Credit-rating downgrade to junk could spark outflows
This article is for subscribers only.
Political turmoil, the risk of a widening budget deficit, a weakening currency and the prospect of a credit downgrade to junk would usually put investors off a country’s bonds. Not when it comes to South Africa.
The lure of the highest yields among emerging-market peers is proving irresistible, with foreign investors buying a net 18 billion rand ($1.3 billion) of South African bonds in September, the most in a month since March. That brought inflows this year to 68 billion rand and foreign ownership of the country’s local-currency debt to about 45 percent, compared with 20 percent for Turkey and 28 percent for Russia.