Bronwyn Blood, fund manager: Granate Asset Management
Buy: Domestic government bonds
In general, bonds are offering value. You can get six-year government bonds yielding in excess of 10% and on the long side you get 12.5%. In addition, you get close to 10% on your money-market type assets. There is also value in inflation linkers, with those on the short end (with shorter maturities) giving you in excess of 4% (in real terms). The only thing that could upend this is when the inflation cycle turns and the repo rate gets cut.
Sell: Domestic corporate bonds
The big area where we are not seeing value in the local bond market is corporate bonds. That’s because credit spreads (the difference between the yield on the corporate debt and the Johannesburg interbank acceptance rate) are so low due to a lack of assets all around. Very few corporates are issuing debt. On the basis of these tight spreads, I would prefer to find offshore credit opportunities or government bond opportunities.
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