The increasing concentration of South African government bonds in the hands of domestic investors, coupled with high levels of state debt, present a risk to the financial industry, the central bank said.

Domestic banks, insurers, pension and investment funds have increased their relative exposure to South African government debt “considerably” in recent years as foreign investors gradually reduced their exposure, the bank said Wednesday in its Financial Stability Review. Holdings by non-residents declined to 25.4% in October, from 38.7% in May 2019, it said.