South Africa would see bond outflows if Moody's cuts to junk - Credit Suisse

Sep. 18, 2019 9:51 AM ETiShares MSCI South Africa ETF (EZA), FLZAEZA, FLZABy: Liz Kiesche, SA News Editor1 Comment
  • South Africa may see bond outflows of $4B-$8B if its rating is cut to junk by Moody's, thereby excluding it from Citigroup's World Government Bond Index, write Credit Suisse strategists including Kasper Bartholdy and Daniel Chodos.
  • The outflows wouldn't occur all at once as there would be a gap between a Moody's downgrade and South Africa's removal from the WGBI.
  • "If we assume $1B-$2B of unhedged outflows from bonds on the day (about a quarter of our total outflows estimation) that could translate into an initial spike of 2%-4% in USD-ZAR," they write.
  • ETFs: EZA, FLZA

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