bonds in ZAR col vento in poppa
Interessante articolo di Bloomberg sui bonds sudafricani
South Africa Bonds' `Perfect Storm' Lures Record Foreign Buying - Bloomberg
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South Africa Bonds' `Perfect Storm' Lures Record Foreign Buying
By Garth Theunissen - Aug 31, 2010
International investors are buying more South African bonds than at any time in the past 15 years, lured by slowing inflation, a stronger rand and higher interest rates than in developed markets.
Net foreign purchases of local-currency
government debt swelled to almost 67 billion rand ($9.2 billion) so far in 2010, more than in any full year since the so-called financial rand was abolished in 1995, according to data from
JSE Ltd., the company that runs the country’s stock and bond exchanges.
The purchases sent yields on the government’s bond due in 2026 down as much as 119 basis points, or 1.19 percentage point, this year to 7.86 percent, the lowest level since January 2009. Even after cutting the benchmark
interest rate 550 basis points since December 2008 to 6.5 percent, the central bank will probably reduce by a further half percentage point on Sept. 9 as inflation slows, according to Johannesburg-based
Nedbank Group Ltd., Vunani Securities and Stanlib Asset Management.
“South African bonds are in a perfect storm -- yields are high, inflation is low and the Reserve Bank is one of the only central banks in the world that can still realistically contemplate cutting rates,” said
Kieran Curtis, who helps manage $2 billion in emerging-market debt at Aviva Investors in London. “You can feel the market looking for places to pick up yield and that’s feeding returns in emerging market bonds.”
Near-zero interest rates in industrialized nations are encouraging investors to borrow at lower costs and invest in markets offering higher returns, prompting rallies in local- currency debt from Indonesia to Brazil. The transactions, known as carry trades, have propelled South Africa’s local-currency bonds to the second-best performers in Europe, the Middle East and Africa after Russia in dollar terms, according available index data compiled by Bank of America-Merrill Lynch.
Seeking Yield
South Africa’s
benchmark interest rate compares with deposit returns of 0.25 percent in the U.S., 0.5 percent in the U.K. and 0.1 percent in Japan.
“The record-low rate we’re seeing globally means there’s a hunt for yield going on at the moment and South Africa offers good returns,” said
Vivienne Taberer, a portfolio manager who helps oversee about $70 billion at
Investec Asset Management in Cape Town. “The market is realizing that local currency emerging-market debt is a good place to be and that’s helping high-yield markets like South Africa.”
Foreign investors bought more South African bonds this year than in the previous 15 years combined, according to JSE Ltd. data. Offshore investors purchased a net 6.89 billion rand of South African bonds between June 1995, when the country scrapped the financial rand, and the end of last year.
Apartheid Currency
The finrand, as it was known, was a parallel currency instituted by the government in 1985 to limit outflows from the country at a time when the apartheid-era regime faced economic sanctions. Non-residents wanting to sell their South African investments had to do so using the financial rand, which traded at a discount to the spot exchange rate, while limitations were placed on the convertibility of financial rand into foreign currency.
UBS AG, Switzerland’s biggest bank, is recommending investors sell South African bonds as inflows in the nation’s fixed-income assets have been “too excessive,” said
Di Luo, an emerging-markets strategist at UBS AG in London. Zurich-based UBS also predicts the rand will give up gains by year-end, reducing investor returns, she said.
The brokerage estimates the rand will depreciate almost 3 percent to 7.60 per dollar by December. The forecast compares with an end-2010 median estimate of 7.68 based on a Bloomberg survey of 18 analysts.
Slowing Inflation
South Africa’s benchmark 13.5 percent bond due September 2015 surged as much as 3.55 rand this year, reducing the yield by 122 basis points to 7.18 percent, the lowest since December 2008.
Inflows into the bond market have helped the rand extend its surge against the dollar since the start of last year to almost 29 percent, making it the second best-performing emerging-market currency after Brazil’s real over the period, according to data compiled by Bloomberg.
The rand traded 0.4 percent weaker from its previous close at 7.3723 per dollar as of 5:46 p.m. in Johannesburg yesterday.
As inflation slows, traders are increasing bets for further interest rate cuts.
Inflation dropped to an annual 3.7 percent in June, the lowest rate in more than four years and below the central bank’s 6 percent target limit.
Abandoning Bets
Slowing price growth data prompted Nedbank, Vunani Securities and Stanlib Asset Management to abandon earlier estimates that the central bank would leave its benchmark rate unchanged at its next meeting.
“The central bank has plenty of room to cut rates thanks to the strong rand, which has reduced imported inflation,” said
Ian Cruickshanks, head of research at Nedbank Treasury in Johannesburg. “Inflation is likely to stay below 4.5 percent until the end of the year.”
Money-market futures used by analysts to gauge interest- rate expectations show traders are pricing in an almost 70 percent probability that the central bank will reduce its main rate by 50 basis points when it meets next week, according to Johannesburg-based
Econometrix Treasury Management, which advises South African banks on foreign exchange transactions.
FRAs, or forward-rate agreements, for
three-month cash contracts due in one month have slumped as much as 1.135 percentage points this year to 6.17 percent, the lowest since the central bank first introduced its repurchase rate in 1999.
“The market is pricing in rate cuts going forward but that’s unlikely to significantly dent foreign portfolio inflows into the local bond market,” said Cruickshanks. “The rate differential between South Africa and the developed world is so high that they’re likely to continue for some time.”
Net Foreign Purchases of South African Bonds (in rand)2010: 66.99 billion (year-to-date)2009: 26.54 billion2008: -15.98 billion2007: 2.15 billion2006: 20.50 billion2005: - 5.00 billion2004: 3.00 billion2003: - 5.40 billion2002: 0.20 billion2001: -26.51 billion2000: -20.53 billion1999: 14.34 billion1998: -9.77 billion1997: 14.78 billion1996: 3.81 billion followingthe March 1995 abolition of the financial rand, the currencypreviously used for foreign capital transactions.Source: JSE Ltd.To contact the reporter on this story:
Garth Theunissen in Johannesburg
[email protected]
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Sicuramente positivo il calo dell'inflazione al 3,7% in giugno , pero' il fatto che gli acquisti di bond sudafricani da parte di investitori esteri nell'anno in corso sia ammontato a 67 miliardi di rand , in forte aumento rispetto ai 26 miliardi dell'intero 2009, dovrebbe metterci in guardia sul rischio di eccessi speculativi.
Personalmente non ho mai investito in ZAR , ne' - considerando la modestia dei tassi nominali - sono intenzionato ad entrare ora.