South Africa trims weekly bond auctions in effort to show fiscal discipline

By Reuters News

JOHANNESBURG, Oct 21 (Reuters) - South Africa's government said on Wednesday that it would reduce the amount of fixed-rate bonds it sells every week and launch a bond buyback programme, part of efforts to show fiscal discipline and bring down debt levels.

The National Treasury said it would cut the amount of fixed-rate bonds on offer by 600 million rand to 1.950 billion rand ($119.08 million) from November 3, and reduce inflation-linked bonds on offer by 100 million rand to 900 million rand from October 30.

The buyback programme, under which it will repurchase some of its own debt before it matures, will smooth out large repayments looming in the years ahead, it said in a statement released the same day as a mid-year budget review.

While the rand currency was broadly steady, the benchmark 2035 government bond rallied on the announcement that weekly auctions would be cut, with the yield falling by 16 basis points to 8.575%.

The mid-year review showed debt repayments are set to more than double to 352.6 billion rand in the 2029/30 fiscal year from 167.6 billion rand this year.

That will push the government's gross borrowing requirement to 586.2 billion rand in 2029/30, even as the budget deficit is projected to narrow.


($1 = 16.3749 rand)

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