Bonds weaker; eye mini-budget

Johannesburg - Bonds were between five and eight basis points weaker in midday trade on Tuesday, taking their cue from a weaker rand.

The local market is awaiting the Medium Term Budget Policy Statement (MTBPS), due to be released by Finance Minister Trevor Manuel in parliament at 14:00 on Tuesday.

By 12:10 the short-term government R153 bond was at 9.670% from its previous close of 9.600%. The medium-term R157 was at 9.420% from 9.345% at Monday's close and the long-term R186 was bid at 9.155% from 9.080% before.

The rand was last at R10.2825 per dollar from a previous close of R10.1263.

Traders said that bonds were holding up well given the rand's weakness.

"We are just waiting now for the mini-budget this afternoon," one trader said. He added that the issues that the market will be watching in the mini-budget are indications of increased spending, bond issuances and if there is any relief for taxpayers.

An anticipated slowdown in tax collection due to slower economic growth could result in more bond issuance and increase supply into a pretty tight market.

At its weekly auction on Tuesday morning, the Treasury received 36 bids totalling R3.325bn for R650m worth of R209 bonds allotted at a clearing yield of 8.710%.

Foreigners were net sellers of R2.397bn worth of bonds on Monday after net sales of R1.063bn worth of local bonds on Friday, Bond Exchange of South Africa statistics show.

Nominal cumulative volume was R40.431bn on Monday from R60.278bn on Friday.

- I-Net Bridge