Market Wrap - Stock pick — SA Gov Bonds
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Steven Schultz from Momentum chose SA Government Bonds as his stock pick of the day.
"Actually it isn't a stock pick it's a SA Government Bond, the tenure which currently trades of the yield of 10.6% which does feel quite generous and so we did a backward analysis using fairly conservative assumptions just to try and determine what is a fair value or fair yield for the bonds and we think on a ten-year at the moment given the quality is somewhere around 9%, then if you use that over a three-year period, assuming 9% is the right yield quality such as our ten-year and the coupon is included, you're looking at a return or somewhere between thirty and fifty percent annualised over the next three years."
"Actually it isn't a stock pick it's a SA Government Bond, the tenure which currently trades of the yield of 10.6% which does feel quite generous and so we did a backward analysis using fairly conservative assumptions just to try and determine what is a fair value or fair yield for the bonds and we think on a ten-year at the moment given the quality is somewhere around 9%, then if you use that over a three-year period, assuming 9% is the right yield quality such as our ten-year and the coupon is included, you're looking at a return or somewhere between thirty and fifty percent annualised over the next three years."
