Foreigners dump R2 billion a day in SA bonds ahead of junk status

Data compiled by Bloomberg shows that investors have been dumping South African government bonds at almost R2 billion a day in August with the increasing possibility of a downgrade to junk status.

The government increased the amount of local-currency debt sold at auctions by 37% last week to help pay for an R128 billion bailout for Eskom Holdings, foreign ownership of South African government debt fell to 37.9% at the end of July, the lowest level this year, from as high as 42.8% in March 2018.

The though foreign ownership is already the lowest this year, inflows have turned into net outflows of 3.2 billion rands for the year in August, in dollar terms South African local-currency bonds have under-performed all major emerging markets in August except Argentina.