The Science Of ...

Bond market 101 (and why foreigners are dumping South African bonds)

I used to think if there was reincarnation, I wanted to come back as the president or the pope or a .400 baseball hitter. But now I want to come back as the bond market. You can intimidate everybody.

James Carvill, Bill Clinton's advisor

In the hours after Finance Minister Malusi Gigaba’s “mini budget” speech last week, foreign investors dumped R5.1 billion of rand-denominated bonds.

That’s the biggest single-day outflow in more than six years.

Yields – or what Government has to pay to holders of those bonds – surged by 56 basis points to 9.42%, the highest level in 19 months.

What are bonds, and what is the bond market?

A government bond is a financial instrument by which government borrows money from investors.

It promises to periodically pay interest (at a rate referred to as “yield”), and to repay the face value of the bond at an agreed upon maturity date.

International credit ratings agencies provide ratings for bonds.

The private sector analogue of a government bond is a corporate bond.

The bond market refers to the financial market where participants issue or buy debt, usually in the form of bonds.

The Money Show’s Bruce Whitfield interviewed RMB Fixed Income Specialist Gordon Kerr for his weekly “The Science Of” feature.

Listen to the interview in the audio below (and/or scroll down for more quotes from it).

An efficient bond market can be the difference between winning and losing a war.

Gordon Kerr, RMB

There will be selling [if South Africa gets downgraded]…

Gordon Kerr, RMB

Nene-gate is the worst thing that has ever happened to our bond market…

Gordon Kerr, RMB

Our bond market is more than 40% owned offshore.

Gordon Kerr, RMB

US bonds pay about 2.5%... The UK is about the same… Some European bonds trade at negative rates…

Gordon Kerr, RMB

Click here (then “like” the page) to follow Bruce on Facebook.

Enter your email address in the form below to receive a newsletter containing the most-read articles of the week from Bruce Whitfield’s The Money Show every Friday morning in your inbox.

Subscribe to our Business Wrap Newsletter


This article first appeared on 702 : Bond market 101 (and why foreigners are dumping South African bonds)


CapeTalk welcomes all comments that are constructive, contribute to discussions in a meaningful manner and take stories forward.

However, we will NOT condone the following:

  • Racism (including offensive comments based on ethnicity and nationality)
  • Sexism
  • Homophobia
  • Religious intolerance
  • Cyber bullying
  • Hate speech
  • Derogatory language
  • Comments inciting violence.

We ask that your comments remain relevant to the articles they appear on and do not include general banter or conversation as this dilutes the effectiveness of the comments section.

We strive to make the CapeTalk community a safe and welcoming space for all.

CapeTalk reserves the right to: 1) remove any comments that do not follow the above guidelines; and, 2) ban users who repeatedly infringe the rules.

Should you find any comments upsetting or offensive you can also flag them and we will assess it against our guidelines.

CapeTalk is constantly reviewing its comments policy in order to create an environment conducive to constructive conversations.

Read More
'Min wage (R3500) to cause retrenchments, but for many it’ll be a big relief'

'Min wage (R3500) to cause retrenchments, but for many it’ll be a big relief'

The Money Show’s Bruce Whitfield interviews SA Payroll Association Exco Member Nicolette Nicholson.

Tax Ombud fights Sars on your behalf (send a complaint, it's free)

Tax Ombud fights Sars on your behalf (send a complaint, it's free)

Bruce Whitfield interviews Tax Ombud Judge Bernard Ngoepe.

The story of pulp and paper company Sappi (employer of 12 800)

The story of pulp and paper company Sappi (employer of 12 800)

The Money Show’s Bruce Whitfield interviews Steve Binnie, CEO of the world’s largest producer of dissolving wood pulp.

Private equity (and mergers & acquisitions) in SA explained in simple terms

Private equity (and mergers & acquisitions) in SA explained in simple terms

The Money Show’s Bruce Whitfield interviews Bowmans Law Head of Private Equity John Bellew.

The story of amaBhungane (and how it’s digging up dung on the Guptas & friends)

The story of amaBhungane (and how it’s digging up dung on the Guptas & friends)

The Money Show’s Bruce Whitfield interviews amaBhungane Centre for Investigative Journalism Investigative Journalist Craig McKune.

Springboks and Bafana Bafana got you down? Watch eSports! It's (way) more fun…

Springboks and Bafana Bafana got you down? Watch eSports! It's (way) more fun…

Bruce Whitfield interviews Gareth Woods from Good Game Well Played and Nick Holden of African Cyber Gaming League.

Popular articles
Oscar's family unhappy with producers as movie makes SA debut this weekend

Oscar's family unhappy with producers as movie makes SA debut this weekend

The movie stars Joburg-born actor Andreas Damm as Pistorius and Victoria Secret model Toni Garrn as Reeva Steenkamp.

Statement to remove LLB programme from SA universities is misleading: Max Price

Statement to remove LLB programme from SA universities is misleading: Max Price

Max Price says Council on Higher Education's announcement that UKZN, UCT and UL could lose their LLB accreditation is not right.

DStv subscriber? ANN7 thanks you for the payday!

DStv subscriber? ANN7 thanks you for the payday!

Bruce Whitfield interviews Outa’s Wayne Duvenhage about his open letter to MultiChoice, who will pay ANN7 R245 million.

Is taking items from the hotel room stealing?

Is taking items from the hotel room stealing?

Tsogo Sun Cape regional manager explains which items are free to be taken home by guests and why.

WATCH: Innovative spray limits toilet flushes and saves water

WATCH: Innovative spray limits toilet flushes and saves water

Loo Me is a simple yet effective scented foam that takes the yuck out of "mellowing" toilets preventing multiple flushes.