Bond market responds positively to MTBPS

SA’s fixed income markets welcomed government’s commitment to stick to fiscal prudence in the medium term while directing spending towards areas that will support economic growth. The projection that the government debt to GDP ratio will peak at 77.7% by 2026 is better than the market expected. There was relief at news that although borrowing requirements have risen by about R40 billion above the February national budget estimate, there will be no increase in weekly auction issuances. Bond yields firmed by about 20bps on the day, as the market had priced in significantly worse outcomes. Click here to listen to STANLIB Deputy Head of Fixed Income Sylvester Kobo’s analysis of the Mid-Term Budget Speech from a fixed income perspective.