SA Rand plumets, debt cost rising on likely sack of Finance Minister Gordhan

The Rand is falling as the cost of insuring South African government debt against default hit the highest level in nearly eight weeks Tuesday amidst fears President Jacob Zuma will fire his Finance Minister Pravin Gordhan.

The president ordered Gordhan to return home from an investor roadshow yesterday.

Five-year credit default swaps jumped 4 basis points to 209 bps from Monday’s close of 204 bps, according to financial data provider IHS Markit.

Yields in South Africa’s dollar-denominated sovereign debt rose across the curve, according to Reuters data. The yield in the 2026 issue added 5 bps to 4.6618 percent.

The beleaguered minister who is now back home told reporters on arrival “let’s wait and see” after learning of reports that President Jacob Zuma was set to remove him.

The minister who is well regarded around the world arrived back from an investor roadshow in Britain on Zuma’s orders.

Gordhan told reporters shortly after landing at Johannesburg’s international airport that he was focused on restoring faith in Africa’s most industrialised economy and had met with about 50 investors while in London.

A television report in South Africa said the top six of South Africa’s ruling African National Congress party have approved the removal of the Finance Minister.

The report by ANN7 television on Tuesday, cited sources although ANC Secretary-General Gwede Mantashe, one of the ANC’s top six, told Reuters he could not comment on the report.

ANN7 also reported that Brian Molefe, ex-head of state utility Eskom, and former finance minister Nhlanhla Nene, were not in the running to replace Gordhan.