South African Rand Tipped to Outperform Sterling Even as Economy and Rating Outlook Deteriorates

- | 7 days ago

"In a world defined by geopolitical happenings, idiosyncratic risks are manifesting in changes in government CDS and US dollar bonds spreads.

The progressive widening in South Africa’s sovereign risk indicators since the turn of the year (with the 5-year CDS up another 4bp overnight) reflects persistent uncertainty about the macroeconomic and political backdrop as the country continues to bear the brunt of load-shedding, and political wrangling in the upper echelons of government," Ramkhelawan-Bhana. The Rand has itself been wounded in the last week by its own souring domestic backdrop, leading the currency to sit out the rebound in emerging markets assets that's been prompted by the U. -China trade deal and its associated recovery of investor risk appetite.

Moody's, the last major agency to still rate South Africa as an investment grade credit prospect, said Monday the country faces years of low growth and with only limited room to reign in its fiscal deficit.

read full story