South Africa - Looking to new heights

The South African inflation-linked market is still at a relatively early stage of development, but its growth has reached a plateau, mainly due to a lack of secondary market liquidity. The challenge now is finding a way to encourage the market to reach new heights. John Ferry reports

The South African government has done a good job of building a reasonable yield curve in inflation-linked securities. Since the inception of the country's inflation market in 2000, it has issued across a range of maturities, from two years to 30 years. This has been good news for certain institutional investors, namely pension funds that have long-term inflation-linked liabilities. The problem is that new issuance, although spread across the yield curve, has been in relatively short supply. What