South Africa cuts bond sales, launches buyback program

South Africa announced today it will reduce weekly bond sales and start a debt buyback program as part of efforts to demonstrate fiscal discipline and lower debt levels.

The National Treasury said it will cut fixed-rate bond offerings by 600 million rand to 1.950 billion rand ($119.08 million) starting November 3. Inflation-linked bond offerings will decrease by 100 million rand to 900 million rand from October 30.

The buyback program will allow the government to repurchase some of its debt before maturity. The Treasury said this will help smooth out large repayments scheduled for coming years.

The announcement came on the same day as the government’s mid-year budget review.

The rand currency remained largely unchanged following the news. The benchmark 2035 government bond rallied after the weekly auction reduction was announced, with the yield dropping by 16 basis points to 8.575%.