south african investors are the most bullish on the nation’s bonds since 1999 as recession fears fade and interest rates are set to peak according to a survey conducted by bank of america corp bonds have become preferred over equity and cash john morris a south africa strategist at the bank said in a note to clients citing the poll carried out between july 713 based on the views of 14 fund managers the results were published just hours before the central bank paused its longest phase of monetary tightening since 2006 and left interest rates unchanged thursday “sixtyfour percent of managers say bonds are undervalued an elevated reading” morris said south african localcurrency bonds performed poorly in the first half of the year and have handed investors losses of 22 in dollar terms in the yeartodate that compares with the average positive return of 38 for an index of em local currency sovereign debt the selloff in the nation’s bonds was driven by worsening power outages a weaker rand international tensions over south africa’s stance versus russia and a deteriorating fiscal outlook other banks have concurred this selloff presented a buying opportunity south africa’s bond valuations are “extremely cheap” according deutsche bank ag which has a strong overweight call on the securities the bonds have rebounded in the past two months handing investors total returns of 17 since the end of may the rally has been aided by the rand strengthening from record lows and inflation data showing improvement