By Ockert Goosen, Executive Director
South African corporates and high-net-worth investors face a simple fact. The local credit pool is too small to offer real protection when it matters most.
Too Few Baskets for Too Many Eggs
As Ockert Goosen, Executive Director at TBI, explains, “Our debt markets are constrained. We have exposure to South African sovereign, five main bank counterparties, and limited corporate debt available, with not enough depth to spread risk properly. If there is a local banking event, investors are fully exposed. Diversification is not optional. It is essential.”
What Happens When All Your Cash Sits at Home
Picture this. A corporate treasurer needs quick access to large sums every month to cover payrolls, suppliers and day-to-day operations. Most of it sits with a few familiar local banks. If a single bank hits a bump, the entire system can feel the strain because there are very few credible alternatives overnight.
Globally, it works differently. Investors spread cash across thousands of short-term credit options. This includes US government treasuries, which are seen as the safest credit instruments worldwide, as well as developed market banks, institutions and corporates with far higher credit ratings than South African counterparties. When one name struggles, the impact is absorbed by the scale of the international market.
A Missed Opportunity for Local Liquidity
South Africa’s short-term cash options work well on paper but cycle through the same tight circle. Most local money market funds channel deposits back to the same five banks, meaning corporates are recycling the same risk each month. Over time, portfolios become highly concentrated in the same names. For corporate investors holding millions or even billions in short-term cash, this concentration can quietly build exposure that no longer aligns with their risk appetite.
What Short-Duration Really Means
When investors look abroad, they gain access to truly short-duration credit. For example, US treasuries and top-rated American and European banks issue debt in short tranches that roll over quickly. The spread between what investors earn above base rates would be smaller because the quality is so high. This is exactly why developed market short-term credit forms the backbone of liquidity strategies worldwide. It balances daily flexibility with strong credit protection.
Global Scale, Local Stability
Ockert notes that the average South African bank credit is sub-investment grade when measured on an international scale. This is because the South African Government has a sub-investment credit rating on an international scale. By contrast, developed market sovereign debt often sit at AA or better and developed market banks at A- or better. The result is a buffer for local investors when global conditions shift. Diversification across different economies means that a single political or market event is far less likely to disrupt all holdings at once.
A Practical Approach, Not Just a Theory
TBI believes that smarter credit structures start with practical global access. The goal is to connect high-quality, short-duration offshore credit to rand portfolios in a way that stays simple, liquid and cost-efficient for South African investors. By making access local, there is no hidden admin or complex exchange control process to manage.
As Goosen says, “We do not chase yield for the sake of it. Our focus is on giving investors better diversity protection and a stronger foundation for the income they rely on. Better structuring brings global quality home in a way that makes sense.”
Why It Matters for South African Businesses
Cash reserves are not just parked capital. They keep businesses running smoothly, employees paid on time and new opportunities funded when needed. In an uncertain market, those reserves must be protected just as carefully as any other asset class.
A Final Thought for Decision-Makers
Events around the world remind us that shocks can appear without warning. When investors hold hundreds of top-rated credits, risk is spread widely and calmly. When all cash sits in one small pool, any surprise can ripple through fast.
For South African advisors and corporates, the real question is simple. If your cash is still stuck in the same narrow pool, what is the plan for protecting it when the unexpected arrives?
