South African bonds gained substantially on Monday afternoon‚ taking their cue from a stronger rand.
The yield on the benchmark R186 bond dipped to its lowest point since late October‚ as the rand powered through R12.85 to the dollar for the first time since March.
The rally in the local fixed-income market and the rand reflected optimism that Deputy President Cyril Ramaphosa will win the ANC presidential race.
Ramaphosa is facing Nkosazana-Dlamini Zuma‚ in a battle that has been described as a make-or-break event.
“The price action is the telling you that Ramaphosa will emerge the new leader and I hope that the market is not going to be disappointed when the results come out‚” said Ashley Dickinson‚ head of fixed income dealing at Sasfin Wealth.
“A Ramaphosa victory will be positive from a sentiment point of view‚ but in reality and practice‚ SA still has a lot of challenges to deal with. Once the dust settles‚ the market will have to face that.”
The winning candidate will succeed President Jacob Zuma‚ whose tenure as head of the party and of the state has been marred by a litany of scandals‚ including allegations of state capture.
Ramaphosa is perceived as a safer bet‚ who will steer the party and‚ by extension‚ the country in the right direction.
At 3.25pm‚ the benchmark R186 government bond was bid at 8.85% from Friday’s 9.01%‚ and the R207 at 7.63% from 7.835%.
The rand was at R12.8771 to the dollar‚ from R12.9651.