South African Bonds Rally Exit From Index Is Finished
- Country’s debt ejected from global index at the end of April
- Investors were pre-positioned for exit, says Aberdeen’s Curtis
This article is for subscribers only.
Bonds gained and the rand rallied after South Africa’s exit from a fixed-income index tracked by funds overseeing trillions of dollars was finalized, removing a key risk overhanging the country’s markets.
The country’s debt was officially ejected on April 30 from the FTSE World Government Bond Index -- which tracks investment-grade debt and is followed by $3 trillion of funds -- after South Africa received a full deck of junk ratings following a cut by Moody’s Investors Service in March. Usually, that would have resulted in an immediate exit for the bonds, but the expulsion was postponed until the end of April given market volatility and liquidity constraints caused by the coronavirus pandemic.