Don’t have your Nedbank ID yet?
Nedbank ID single sign-on gives you full digital access to Nedbank’s banking and lifestyle products and services on the Money app or Online Banking.
Log in
Log in to Online Banking or another one of our secured services.
Get in touch
Find us
- Login & Register
- Online Banking
- Online Share Trading
- NedFleet
- Register for Nedbank ID
- About us
- Awards
- Deals
- Explore About us
- Awards
- Deals
- R4bn Tronox deal funds two 100MW solar plants
- Billions to help Redefine build green properties
- Harmony pursues green goals with R10 billion loan
- Cold solutions finance for cold storage facilities
- International Finance Corporation green bond fund
- Envusa energy deal: The way for renewable energy
- Paladin Energy senior debt funding partnership
- Renewable energy wind farm financing
- Stor-Age’s successful inaugural bond auction
- PlusNet, Peninsula Packaging and Barrier Film Convertors co-investment opportunity | Nedbank CIB
- IFC Green Loan | Nedbank CIB
- AngloGold appoints Nedbank CIB as sole underwriter | Nedbank CIB
- Nedbank CIB Property Finance Team achievement | Nedbank CIB
- PwC Tower, Westlands — Where Kenya's corporate vision meets world-class execution
- Mining finance for gold projects in Africa | Nedbank CIB
- R4bn Tronox deal funds two 100MW solar plants
- Billions to help Redefine build green properties
- Harmony pursues green goals with R10 billion loan
- Cold solutions finance for cold storage facilities
- International Finance Corporation green bond fund
- Envusa energy deal: The way for renewable energy
- Paladin Energy senior debt funding partnership
- Renewable energy wind farm financing
- Stor-Age’s successful inaugural bond auction
- PlusNet, Peninsula Packaging and Barrier Film Convertors co-investment opportunity | Nedbank CIB
- IFC Green Loan | Nedbank CIB
- AngloGold appoints Nedbank CIB as sole underwriter | Nedbank CIB
- Nedbank CIB Property Finance Team achievement | Nedbank CIB
- PwC Tower, Westlands — Where Kenya's corporate vision meets world-class execution
- Mining finance for gold projects in Africa | Nedbank CIB
- Women of Corporate Investment Banking
- Young Analyst Programme
- Insights
- Articles
- Conferences
- Explore Insights
- Articles
- Commercial property trends 2022
- Green energy in the developing world | Nedbank CIB
- How sustainable finance creates value
- How the property sector recovered in 2023
- There's a new buoyancy around water and sanitation
- What happens when finance meets sustainability?
- Africa’s renewable-energy projects
- Breaking barriers for energy transition in mining
- Nedbank CIB wins big at 2025 IFC Awards
- Commercial property trends 2022
- Green energy in the developing world | Nedbank CIB
- How sustainable finance creates value
- How the property sector recovered in 2023
- There's a new buoyancy around water and sanitation
- What happens when finance meets sustainability?
- Africa’s renewable-energy projects
- Breaking barriers for energy transition in mining
- Nedbank CIB wins big at 2025 IFC Awards
- Conferences
- Solutions
- Corporate Finance
- Financing
- Investing
- London
- Markets
- Nedbank Business Hub
- Transacting
- Explore Solutions
- Corporate Finance
- Financing
- Investing
- London
- Markets
- Nedbank Business Hub
- Transacting
- Sustainability
- Explore Sustainability
- Contact us
- Explore Contact us
The ILB curve steepens, and we expect more
The inflation-linked bond (ILB) curve has seen some bear steepening over the past month, with the back end of the curve moving above 5,0% last week. We maintain our view that long-dated ILB yields are still too low, and as a result, we expect further upward pressure and steepness.
Upward pressure for ILBs comes from more than one source
We expect the upward pressure on real yields to persist, with the pressure emanating from three areas – higher US real yields, South Africa’s (SA’s) budget deficit and switch auctions.
Our ILB fair value estimates remain unchanged and our positioning too
Our ILB fair value curve remains unchanged. Our 10-year ILB yield is at 5,1% (vs. the current I2033 at 4,8%), while our 30-year yield is at 5,4% vs. the current I2050 at 5,1%. Although we hold a preference for nominal bonds over ILBs, if we look at ILBs on a standalone basis, our preference is for the 3-year to 10-year bucket. Beyond this, cash competes well.
Preliminary budget data for August shows growing budget concerns, supporting our ILB view
The latest preliminary budget data for August confirmed our ILB view last week. Last week, the National Treasury (NT) published the preliminary budget balance data for August, which implies that the preliminary deficit for August is c.R48bn. At this level, the deficit for August is more than twice the size of its historical average. If the R16bn loan to Eskom is expensed, the deficit for August would be c.R64,3bn.
Sukuk bond could ease some pressure on the funding requirement
The NT announced that it is planning to issue its inaugural rand-denominated Sukuk bond, which may ease some of the funding pressure.
Rand back above 19,00; our fundamental view stands
From a fundamental perspective, our view remains unchanged – if the rand moves towards the 20,00-20,50 range against the USD, we would be very careful to extrapolate further weakness from there. More short term, from a technical perspective for the USDZAR, the range of 19,30–19,35 and then 19,60 should provide resistance. On the downside for the USDZAR, 18,90 and the 18,65-18,70 range should provide support.
Gain full access to this report by signing up to the Nedbank Research Hub
Register