Demand sags at record bond sale to help fund Eskom

A bus passes power lines at dusk. (iStock)
A bus passes power lines at dusk. (iStock)

Demand at South Africa’s weekly bond auction fell after the country raised issuance to a record, partly to fund the rescue of troubled state-owned company Eskom.

Traders placed R10.3bn of orders, or 2.3 times the R4.53bn of securities on sale, at the scheduled weekly Treasury auction on Tuesday, according to data published by the central bank. That compares with a bid-to-cover ratio of 3.3 at the previous sale on July 30. The average for the previous four auctions was 3.6.

The Treasury raised the amount of bonds on sale at weekly auctions by 37%, from R3.3bn previously, as a sluggish economy weighs on tax collection at a time when state-owned companies including Eskom are clamouring for bailouts.

Bonds pared gains after the sale, with the yield on government debt due December 2026, one of the securities on sale, climbing two basis points from the pre-auction level to 8.41%. Yields on the 2030 and 2035 securities also climbed.

South African bonds have lost 5.4% this month in dollar terms, the worst performance among emerging-market sovereigns and more than the average loss of 1.8%, according to Bloomberg Barclays indexes.

ZAR/USD
17.00
(-0.09)
ZAR/GBP
21.24
(-0.12)
ZAR/EUR
19.14
(-0.13)
ZAR/AUD
11.81
(-0.13)
ZAR/JPY
0.16
(-0.20)
Gold
1774.74
(+0.03)
Silver
18.05
(+0.01)
Platinum
808.00
(+0.25)
Brent Crude
42.78
(-0.79)
Palladium
1914.01
(+0.62)
All Share
54521.90
(-0.17)
Top 40
50179.89
(-0.26)
Financial 15
10150.02
(-0.64)
Industrial 25
76554.73
(+0.52)
Resource 10
50138.02
(-1.24)
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Please select an option Oops! Something went wrong, please try again later.
Results
I'm not really directly affected
18% - 1592 votes
I am taking a hit, but should be able to recover in the next year
23% - 2084 votes
My finances have been devastated
35% - 3129 votes
It's still too early to know what the full effect will be
25% - 2257 votes
Vote