The yield on the South African 10-year bond climbed to a 26-month high of 10.505%, with investors retreating from borrowing debt as the perceived risk of the country increased amid ongoing power outages implemented by state-owned power utility Eskom. The company's credit risk is soaring after a standoff over wage negotiations forced the implementation of the worst power cuts since 2019 to prevent a total collapse of the grid. Additionally, policymakers from major central banks reaffirmed their commitment to control inflation even at the risk of an economic downturn. Domestically, the South African Reserve Bank in its annual report released on June 27th has given the strongest indication yet that it will continue aggressively hiking interest rates in a bid to maintain price stability in the country. Economists are expecting the South African Reserve Bank to raise rates further between 50 and 75 basis points in July, and another 25 basis points hike in September.
Historically, the South Africa Government Bond 10Y reached an all time high of 20.69 in August of 1998. South Africa Government Bond 10Y - data, forecasts, historical chart - was last updated on July of 2022.
The South Africa Government Bond 10Y is expected to trade at 10.50 percent by the end of this quarter, according to Trading Economics global macro models and analysts expectations. Looking forward, we estimate it to trade at 10.74 in 12 months time.