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TRANSCRIPT
POSITIONING FOR A RECOVERY
15 APRIL 2020
ANCHORFIXED INCOME MARKET UPDATENOLAN WAPENAARCO-CIO AND FUND MANAGEMENT
AGENDA
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Relief Programmes
US Yields
South African Yields
The Rand
RELIEF PROGRAMMES
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NATURE ESTIMATED SIZE ($BN) PROGRAMME
Financial Market Support 2 400 Quantitative Easing
Financial Market Support 500 Primary Market Corporate Lending Facility
Financial Market Support 250 Secondary Market Corporate Lending Facility
Financial Market Support 100 Term Asset Backed Loan Facility
Financial Market Support 500 Municipal Lending Facility
Total 3 750 17,8% of GDP to ensure that funding for corporate sector is available and does not freeze up.
SMME Support 2 200 CARES Act.
SMME Support 550 Paycheck Protection Programme Liquidity Facility
Total 2 750 13% of GDP to support SMME.
List of Programmes in the United States
RELIEF PROGRAMMES
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NATURE ESTIMATED SIZE ($BN) PROGRAMME
Financial Market Support 2 400 Quantitative Easing
Financial Market Support 500 Primary Market Corporate Lending Facility
Financial Market Support 250 Secondary Market Corporate Lending Facility
Financial Market Support 100 Term Asset Backed Loan Facility
Financial Market Support 500 Municipal Lending Facility
Total 3 750 17,8% of GDP to ensure that funding for corporate sector is available and does not freeze up.
SMME Support 2 200 CARES Act.
SMME Support 550 Paycheck Protection Programme Liquidity Facility
Total 2 750 13% of GDP to support SMME.
List of Programmes in the United States
30% of South Africa’s GDP would amount to R900 billion of support.
In the US, companies borrow money from the leveraged loan market and the bond market. In South Africa, companies borrow money from banks. South Africa does not need the financial market support that the US has applied and instead, the South African banks act as a buffer. We have seen regulatory relief that is specifically aimed at facilitating the banks giving assistance to the SMME market. The amount of the support from banks is difficult to quantify and it is clear that SMME’s will not all be paying their rent and wages at the end of April. The costs of Lockdown will be shared by banks, landlords, businesses and labour.
To just match the SMME support that we have seen in the US, South Africa would need to spend R390 billion. South Africa has so far announced support packages that are less than 4% of GDP if we include the benefits of the 2.25% interest rate cuts that we have seen in 2020.
US BONDS – WHY NOT ZERO (OR NEGATIVE)?
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0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
Apr-18 Jul-18 Oct-18 Feb-19 May-19 Aug-19 Dec-19 Mar-20 Jun-20
Bo
nd
Yie
ld (
%)
US 10yr Anchor Fair Yield
ANCHOR US BOND YIELD MONITORING
DOMESTIC BONDS – EXTREME BY ANY MEASURE
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7.0
7.5
8.0
8.5
9.0
9.5
10.0
10.5
11.0
11.5
Jan-18 Apr-18 Jul-18 Oct-18 Feb-19 May-19 Aug-19 Dec-19 Mar-20 Jun-20
Bo
nd
Yie
ld (
%)
R186 Anchor Fair Yield
Opportunity
ANCHOR SA BOND YIELD MONITORING
CURRENCY – VERY STRETCHED
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0.0000
2.0000
4.0000
6.0000
8.0000
10.0000
12.0000
14.0000
16.0000
18.0000
20.0000
Ap
r-0
0
Oct
-00
Ap
r-0
1
Oct
-01
Ap
r-0
2
Oct
-02
Ap
r-0
3
Oct
-03
Ap
r-0
4
Oct
-04
Ap
r-0
5
Oct
-05
Ap
r-0
6
Oct
-06
Ap
r-0
7
Oct
-07
Ap
r-0
8
Oct
-08
Ap
r-0
9
Oct
-09
Ap
r-1
0
Oct
-10
Ap
r-1
1
Oct
-11
Ap
r-1
2
Oct
-12
Ap
r-1
3
Oct
-13
Ap
r-1
4
Oct
-14
Ap
r-1
5
Oct
-15
Ap
r-1
6
Oct
-16
Ap
r-1
7
Oct
-17
Ap
r-1
8
Oct
-18
Ap
r-1
9
Oct
-19
Ap
r-2
0
Oct
-20
Ap
r-2
1
Oct
-21
Fair Range ZAR_USD ZAR_PPP
ACTUAL ZAR/USD VS ZAR PPP MODEL
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