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Yields on rand-denominated securities due December 2026 fell five basis points to 8.55% by 8:09am in Johannesburg, the lowest since May 30. The rand led gains in emerging-market currencies, advancing for a second day to trade 1.3% stronger at 14.3077 per dollar.
The lack of news from Moody’s means South Africa retains its position in Citigroup Inc.’s World Government Bond Index for now. An exit from the gauge would spark forced selling of local bonds by investors that track the measure. leading to outflows of as much as $10bn, according to Investec Bank Plc.
The decision by Moody’s Investors Service not to release its debt rating for South Africa has been understood to be another chance for the country to better its political and policy reforms. Moody’s was expected to release its rating on Friday evening but resolved to delay.
— Tuks FM 107.2 News (@TuksFMNews) April 1, 2019
“The rand is demonstrating some of the markets’ relief,” said Bianca Botes, a corporate treasury manager as Peregrine Treasury Solutions. “Little news from Turkey and other emerging markets has assisted the currency in its leg stronger.”
Options traders pruned their short-term pessimism on the South African unit as it rebounded. The premium of options to sell the rand over those to buy it, known as the 25-Delta risk reversal, fell by the most in six months.
Moody’s said its sovereign release calendar was indicative of dates for potential action only. It rates South Africa’s foreign- and local-currency debt at Baa3, with a stable outlook.
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