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Blog: 3 February 2017 (Who owns SA's government bonds)
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In today's blog we take a look at who actually owns South Africa's government bonds. Is it local investors, local companies, banks, financial institutions or is a lot of it owned by non-resident entities? Such as other governments or foreign companies. We take a look below. Note the graphic uses the average percentage holding for each year.
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Non- Residents and Pension Funds
From the graphic above is clear that there are two clear stand outs in terms of their percentage holding of total SA government bonds, and they are non-residents and local pension funds.
Non-residents in this case refers to individuals and companies outside of South Africa, as well as the governments of other countries. Local pension funds are all pension funds registered in South Africa, this includes the government pension fund (GPF) and all other pension funds operated by the likes of Coronation, Investec etc.
Non-residents in this case refers to individuals and companies outside of South Africa, as well as the governments of other countries. Local pension funds are all pension funds registered in South Africa, this includes the government pension fund (GPF) and all other pension funds operated by the likes of Coronation, Investec etc.
Now in the news recently a lot of noise has been made regarding the outflow of funds out of South Africa and the fact that South Africa is flirting with "junk bond" status. Based on the graphic above it is clear that there has not been a massive outflow of funds out of government issued bonds, with the average holding of non-residents for 2016 sitting at just over 35% of all South African government bonds compared to around 25% in 2011. So in fact their relative holding in government bonds have increased (probably the lure of higher yields compared to more developed countries low yields on bonds).
While insurers average percentage holding has been dropping over the years from roughly 12% in 2011 to around 8% for 2016, other financial institutions' holdings have increased over time from 6.7% to 9.6%
SA's banks holdings in government bonds has remained relatively stable over the period in question with it hovering around the 16% of all government bonds.
While insurers average percentage holding has been dropping over the years from roughly 12% in 2011 to around 8% for 2016, other financial institutions' holdings have increased over time from 6.7% to 9.6%
SA's banks holdings in government bonds has remained relatively stable over the period in question with it hovering around the 16% of all government bonds.
