JOHANNESBERG, April 16 – South African government bonds have returned 6.3% in dollar terms since mid-March, outperforming the 2.3% average for emerging-market local currency debt over the same period, according to Bloomberg data.
The gains follow a sharp selloff in March, when yields on rand-denominated government bonds rose by more than 100 basis points as higher oil prices triggered inflation concerns in energy-importing countries, including South Africa.
Foreign investors sold a net 56 billion rand ($3.4 billion) worth of bonds during the month, the largest outflow on record. However, flows turned positive in early April, with net inflows of 13.5 billion rand.
Van Eck Associates Corp., a New York-based asset manager overseeing about $225 billion, began buying South African bonds on March 16 after holding no exposure earlier. The firm focused on longer-dated securities, including bonds maturing in 2037, 2040 and 2044.
The rebound comes after a broader rally earlier in the year, when South Africa’s 10-year bond yield fell by more than 300 basis points to a record low in February, supported by easing inflation and an improved fiscal outlook.
Foreign investors held 32% of South Africa’s fixed-rate government bonds at the end of February, up from 30% a year earlier, before the March selloff.
