(Bloomberg) -- Franklin Resources Inc., JPMorgan Chase & Co. and Wells Fargo & Co. are among institutional investors that have dumped South African bonds this quarter, fueling outflows at a rate not seen since before elections in May.

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San Mateo, California-based Franklin cut its holdings of the debt by 9% to 12.9 billion rand ($709 million), according to a March 18 filing. JPMorgan trimmed its position by 6%, while Wells Fargo reduced its holdings by more than half, according to data compiled by Bloomberg.

Government bonds have declined this year as South Africa’s relations with the US soured, sparking speculation that the country may lose its preferential status under the African Growth and Opportunity Act, or AGOA, a trade accord covering about $3.6 billion of its exports to the US.

President Donald Trump’s administration has already suspended aid to South Africa over its alleged ties with Iran and support for the Palestinian cause, and expelled the country’s ambassador for calling Trump a “supremacist.”

“Investors are sweating bullets, thinking Trump’s going to swing the AGOA axe over our rocky US ties,” said Kristof Kruger, a fixed-income trader at Prescient Securities Ltd. Sellers “are likely dodging sanctions or trade hits,” he said.

Foreign investors have sold about 16.1 billion rand in March, according to JSE Ltd. data. Daily net sales averaged 1.8 billion rand over the past 30 days, a pace last seen before the 29 May election in which the African National Congress lost its parliamentary majority.

Part of the reason why the rand has strengthened this month is that foreign investors selling the bonds are also unwinding their currency hedges, according to Warrick Butler, head of foreign-exchange trading at Standard Bank Group Ltd.

“Offshore selling has driven the price action in government bonds over the past few days given the divergence between bonds and the currency,” said Michelle Wohlberg, a fixed-income analyst at Rand Merchant Bank in Johannesburg.

Investors are also concerned about South Africa’s fiscal outlook, according to Adam Furlan, a portfolio manager at the South African unit of Ninety One Plc. Members of the governing coalition have rejected tax increases in the budget, raising concern over a potential increase in borrowing.

Still, domestic investors have stepped in to buy the bonds, with bids at Tuesday’s weekly auction for more than four times the amount on sale. Sanlam Ltd., Standard Bank and Coronation Fund Managers Ltd. are among the biggest holders of the debt, according to data compiled by Bloomberg.

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And not all foreign investors have been sellers: Allianz SE remains the second-biggest single holder, boosting its holdings by 13% to 77.5 billion rand, according to a March 18 filing. Blackrock Inc. in a filing on the same date, reporting lifting its holdings by 13% to 44.9 billion rand.

“We expect the budget process will be resolved with some compromises,” Furlan said. Ninety One has lifted its holdings of the bonds by 4.5% to about 59.5 billion rand, according to the firm’s latest filing on Jan. 31., making it the third-largest holder of the debt. “The overarching theme of debt consolidation will be maintained and is a positive.”

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