Alexia Morris

The South African listed credit is a c. 1.1trn nominal market (excluding government paper), consisting of c. 2 484 listed debt instruments issued by 103 issuers. The market is dominated by bank and financial issuers who account for c. R407bn (37% of the issuance), while State Owned Enterprises (SOEs) account for R246bn (22%) followed by the corporate sector of R158bn (14%). The rest of our market consists of credit-linked notes (CLNs) at R120bn (11%), structured notes at R105bn (9.7%), securitisations at R46bn (4.2%), municipal bonds at R7.9bn (0.7%), and issuers of asset-backed commercial paper at R2.8bn (0.2%). Listed credit instruments are a widely deployed investment instrument in many specialist fixed income portfolios, and corporate debt funding plays a vital role in the capital structure of a firm, especially in the funding structure of South African banks.

The South African listed hospital sector was a disappointing hunting ground for investors over the last decade. An investment in Netcare (NTC) and Life Healthcare (LHC) from the beginning of 2015 to the end of 2023 resulted in a total shareholder return of -48% and -40%, respectively.