Investor interest in government bonds has picked up in recent months in the hope of a change in government and implementation of reforms. Macroeconomic imbalances, however, have risen to concerning levels, and a renewed EU Excessive Deficit Procedure is clearly on the horizon.

Takeaways from Climate Week NYC, including a push for better disclosure of climate-related risks; New IIF climate finance workshops:  how best to measure and analyze climate risk and opportunities?; Progress on the UN sustainable development goals will require more partnerships: the NGFS gets new members; Issuance of SOFR bonds by U.S. federal agencies helps improve liquidity in this key market ahead of LIBOR transition

South Africa’s debt could reach as high as 95% of GDP in a pessimistic scenario. Low growth, high interest payments, and a decade of mismanagement are at fault. SOEs are a drain on public finances, and Eskom alone could add 6pp to debt. Mitigating factors are SARB independence, limited FX debt, and long maturities. Moody’s may put SA on negative watch but keep the IG rating for a little longer.