South African bond yields declined to a record low as foreign investors were net buyers of the nation’s debt for the first time in three days amid concern that U.S. budget talks are deteriorating. The rand weakened.
Yields on 6.75 percent bonds due March 2021 retreated for a third day, dropping two basis points to 6.38 percent, the lowest on record, by 10:06 a.m. in Johannesburg. The rand depreciated for a second day, slipping 0.3 percent to 8.5056 per dollar, paring its gain this month to 4.5 percent.
Foreign investors bought a net 534 million rand ($62.8 million) of South African bonds yesterday, after two days of net sales, according to data supplied by JSE Ltd., operator of the country’s stock and bond exchanges. Total net foreign purchases reached 92.2 billion rand, the most on record. In the U.S., the White House warned business leaders yesterday that talks between President Barack Obama and House Speaker John Boehner to avert more than $600 billion in tax increases and spending cuts set to start in January are regressing.
“Any further developments that derail discussions will only further heighten overall levels of risk aversion to the point where investors once again feel the need to rotate back towards the safe haven assets,” George Glynos, a Johannesburg- based analyst at ETM Analytics, and colleagues wrote in e-mailed comments.
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