FCC urges Treasury to seize opportunity to restructure debt as bond yields fall

THE Fiscal Service Commission (FCC) has urged National Treasury to urgently pursue proactive debt restructuring, arguing that South Africa is missing a rare window of opportunity created by sharply lower government bond yields.

- BANELE GININDZA

Briefing Parliament on the recently tabled Medium-Term Budget Policy Statement (MTBPS), FCC head of research Chen-Wei Tseng said the yield on the 10-year government bond has dropped from a peak of 11% to 8.67%.

He said this signals that investors now perceive lower sovereign risk, and that government could potentially refinance its debt at a significantly lower cost.

Chen-Wei said Treasury could now possibly borrow the same amount as before but costing less, however, warned that such savings do not materialise automatically. "But it does not happen automatically. It needs active market engagement. It's not an easy job," he said.