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* South Africa's bonds due to Turkey's woes
* Country in recession for the first time since 2009
* Ramaphosa's desire to revive the economy is uncertain
* The demand for bonds in South Africa could resume after the October budget
By Mfuneko Toyana
JOHANNESBURG, Sept. 5 (Reuters) – A surprise economic downturn has put South Africa at the center of its shrinking revenue and growing indebtedness, and may intensify bond sales at a time when turmoil in Turkey is not are not at the rendezvous.
Since August, investors have abandoned South African bonds, as emerging market sales have accelerated as a result of the Turkish central bank's ability to contain double-digit inflation, which has nearly 18%.
Bonds rebounded in July after a record sell-off in June as investors opted for a high return on investment.
But the announcement of the recession of the most industrialized economy in Africa caused the fall of money and bonds, destroying the optimism that followed the entry in February of President Cyril Ramaphosa and the Minister of Finance Nhlanhla Nene.
The fall of South Africa in the recession for the first time since 2009 is a blow for Ramaphosa, who spoke of his plans for economic recovery after nine years of stagnation under former president Jacob Zuma.
The rand dropped 5% and local currency and foreign bond yields climbed in response to news of the recession.
"All bonds being equal to more than 9% should be attractive, but we are really concerned about the impact of GDP data on deficits," said Ruen Naidu, head of multiple assets at Argon Assets.
The recession could also attract the attention of rating agencies, which have South African sovereign ratings close to "junk" status.
"Minister Nhlanhla Nene has very limited options. It must consolidate the October budget or risk being downgraded by Moody's, "said Investec Nazmeera Moola's co-head of fixed income.
Pretoria has a large budget deficit of 4.3 percent of GDP and its public debt has exploded in the last decade, from around 20 percent to more than 50 percent, attracting the attention of rating agencies .
With the sad growth process prevailing on inflation, the central bank may be forced to hold lending rates, removing another factor that has made South Africa's bonds sought among emerging markets.
After heavily weighing interest rate increases last month, the futures markets have significantly reduced these bets. Analysts expect South African bonds to be in demand only later this year.
"We believe that once the threat of rating downgrades and the medium-term budget statement are adopted in October, there may be an opportunity to acquire ZAR assets," said Christopher Shiells, Senior Analyst. Emerging Markets at Informa Global Markets. (Edited by James Macharia)
