Author: Paul Marais

In the current environment, South African nominal government bonds appear to be an attractive investment. But are they really as attractive as they appear? There is no question that taken purely from an income point of view, bonds appear to be an attractive investment given that the yield curve is steep with cash rates significantly lower than long bond rates. The yield on a 10-year bond is approximately 9.5% and the same value for 3-month debt is 3.53%, resulting in a difference, or spread, of 5.72%. A year ago this spread was 2.37%. In other words, investors can now earn…