Morning Commentary: South Africa spreads firm overall as ANC counts votes in leadership election

By Rebecca Melvin

New York, Dec. 18 – Spreads on South Africa debt were very firm overall on Monday as the African National Congress began to count votes to decide the new leader of the party, which is run by president Jacob Zuma.

The ANC had responded to accusations of vote rigging and other irregularities by disqualifying almost 500 delegates, but the election proceeded with results expected later Monday that will put either deputy president Cyril Ramaphosa or ex-minister Nkosazana Dlamini-Zuma at the helm of leadership.

A victory by pro-business leader Ramaphosa is viewed as positive for South African assets.

Spreads on the bonds of Eskom Holdings SOC Ltd., South Africa’s state-run power utility, were notably tighter on Monday. These bonds maturing in 2021, 2023 and 2025 had dropped to their lowest levels in a year in the middle of November.

The Eskom 5¾% bonds due 2021were seen on Monday at 99¾ bid, 100¾ offered with yield spread tighter by 10 basis points on the month, a London-based trader said.

South Africa’s 5 7/8% bonds due 2025 were seen at 108¼% bid, 109¼ offered with the spread tighter by almost 15 bps on the day and almost 17 bps on the month.

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