(Bloomberg) -- A relatively stable rand, falling inflation expectations and steady interest rates have helped to resurrect corporate-bond sales in South Africa after a decline last year.
Companies in Africa's most industrialized economy have raised 65.5 billion rand ($4.5 billion) this year, compared with 42 billion rand in the comparable period in 2018, according to data compiled by Bloomberg.
“There is a shortage of corporate bonds with a good credit ratings in the market, and spreads keep compressing because demand outweighs supply,” said Michelle Wohlberg, a bond analyst at Rand Merchant Bank in Johannesburg. Still, corporate yield premiums “provide a nice uptick over government bonds,” she said.
Financials account for 78% of corporate issuance this year. The biggest issuer was Standard Bank Group Ltd., with 11.7 billion rand, surpassing last year's leader, FirstRand Ltd. Absa Group Ltd. is the leading arranger, followed by Standard Bank and then FirstRand.
South African corporate bonds have returned 6.9% this year in dollar terms, more than the 5.8% average for emerging markets and beating the 5.1% return on South African government bonds, according to Bloomberg Barclays indexes.
--With assistance from Renee Bonorchis.
To contact the reporter on this story: Colleen Goko in Johannesburg at cgoko2@bloomberg.net
To contact the editors responsible for this story: Dana El Baltaji at delbaltaji@bloomberg.net, Robert Brand, Srinivasan Sivabalan
©2019 Bloomberg L.P.
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