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South African rand, stocks lifted by dollar bond issue
08/04/2016 00:00:00
by Reuters

JOHANNESBURG: South Africa's rand, stocks and bonds all rallied on Friday, with investor confidence lifted by Pretoria's successful issuing of a foreign dollar bond in the face of political upheaval and the prospects of looming ratings downgrades.

The Treasury said its $1.25 billion 10-year bond, with a coupon of 4.875 percent, had been more than two times oversubscribed, mostly by investors based in Europe and the United States.

"It is a case of relief across local assets after what has been a relatively downbeat week. The successful placing of the 10-year bond also had a positive impact on sentiment toward South Africa," senior economist at NKC African Economics Bart Stemmet said.

"It shows investors are not running to the hills yet."

By 1504 GMT the rand had gained nearly 2 percent to 14.9500 per dollar, after reaching a peak of 14.9185 on the day.

Finance Minister Pravin Gordhan has been anxious to reassure investors about continuity in fiscal policy after President Jacob Zuma changed finance ministers twice in less than a week in December, triggering a panic run on the rand.

Zuma, who has been dogged by controversy over the past decade, is under mounting pressure to quit after the Constitutional Court found he breached the law by not heeding a directive to make payments for upgrades to his personal home.

Government bond prices also rose, sending the yield on the benchmark bond due in 2026 down 8 basis points to 9.195 percent.

Stocks snapped a three-day losing streak, led by Illovo Sugar, which surged over 15 percent to a 12-month high of 23.71 rand on news that Associated British Foods, its top shareholder, had clinched a deal to buy the rest of the sugar producer for 5.6 billion rand ($370 million).

The benchmark Top-40 index rose 0.51 percent to 45,252.36. The wider All-share index added 0.54 percent to 51,424.48.


Trade volumes were low with almost 208 million shares changing hands compared with last year's daily average of 290 million.


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