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Foreigners Dump South African Bonds on Threat of Downgrade to Junk

  • Non-resident holdings of government debt at lowest this year
  • Nation’s local-currency bonds are among worst performers in EM
Updated on

Investors have been dumping South African government bonds at a rate of almost 2 billion rand ($132 million) a day in August.

With issuance increasing and a downgrade to junk a looming possibility, non residents have sold a net 14.4 billion rand of the debt in August so far, according to JSE Ltd. data compiled by Bloomberg. That’s an average of 1.8 billion rand a day. The sales have wiped out inflows at a time when the country needs foreign investment to close a current-account deficit that was equivalent to 2.9% of gross domestic product in the first quarter.