South Africa Set For Citi World Bond Index

Bonds

VENTURES AFRICA – South African bonds are likely to become the first African government bond included in Citigroup’s World Government Bond Index (WGBI) by October, the US bank said on Tuesday.

 

The WGBI has 22 countries and South Africa’s 11 eligible government bonds might be included soon; thereby widening Citigroup’s investor base and pulling in potentially billions of dollars to the continent’s biggest debt market. South Africa’s bonds would have a 0.44% weighting in the index, based on the current $88bn value of the debt stock.

 

Citigroup indicated that South Africa is currently in a three-month “monitoring period” to make sure it meets entry requirements.

 

“If South Africa continues to meet all WGBI criteria with the May and June 2012 profiles, it will become the first African government bond market to be included in the WGBI,” Citigroup said.

 

Other emerging markets in the WGBI are Malaysia, Poland and Mexico.

 

Fin24 reports that South Africa’s inclusion could attract market players who typically invest in G7 debt into Treasuries issued by the government of Africa’s largest economy.

 

According to sub-Saharan Africa strategist at Citigroup Johannesburg, Leon Myburgh, “The big thing about it is it will add a new investor base into South Africa and that’s probably the most important part of this inclusion”

 

An announcement is expected at the end of the current “monitoring period” – June.