Commercial office buildings in the the Johannesburg Central Business District. Photographer: Waldo Swiegers / Bloomberg That risk is leading more funds to shun the debt even though the majority sees the bonds as undervalued, John Morris, a South Africa strategist at the bank, said in a note. Only 18% of the managers surveyed were bullish on local bonds over 12 months, down from 57% in July.
A government official said last week tax revenue is falling well short of targets, fueling concerns it will have to flood an already near-saturated market with increased bond issuance.
South African bonds extended declines on Monday, with yields on 10-year notes rising a seventh consecutive day. The debt has been under pressure since February after the government signaled an increase in borrowing in coming years to finance a debt-relief plan for Eskom Holding SOC Ltd., the ailing state-owned electricity firm.