South African Bonds Extend Losses on Tax Warning
- Treasury DG acknowledges ‘resistance’ from debt investors
- Bond supply overwhelming demand, says Foord Asset Management
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South African bonds extended declines on Tuesday as a top official said tax revenue is falling well short of targets, fueling concerns that the government will have to flood an already near-saturated market with increased bond issuance.
The warning from South African Revenue Service Deputy Commissioner Johnstone Makhubu came after the National Treasury last week raised the alarm about the budget deficit, cautioning government departments that they would have to rein in spending. Tax revenue rose 2.6% in the year through August, compared with a budget estimate of 6%, as rolling power outages crimped economic output, Makhubu told Business day newspaper.