After a volatile 2020, what is the current state of South Africa’s listed credit markets – and what opportunities exist for issuers and investors? ask Matthew Duggan and Jonathan Burnett.
2020 was a historically challenging year for all market participants. Investors and bond issuers alike watched as charts spiked, graphs dipped, and markets reacted to the unfolding economic crisis. In the markets we saw unprecedented volatility across every asset class. This was greatly exacerbated by challenging liquidity which ultimately resulted in the central bank taking action in the government bond market.
That illiquidity was most apparent in the corporate credit market. Now, a few months later, there are still elements of that "muscle memory" from an investor perspective, and investors have responded to the crisis environment by requesting longer lead times into primary issuance. They are no longer willing to participate on what could be deemed to be "stale" financials. Understandably, enhanced credit work is required to participate in this market environment.