Bonds drift weaker after PPI

Johannesburg - Despite a better-than-expected PPI figure, South African bonds remained in softer territory in midday trade on Thursday.

"Guys are still digesting the contents of the budget - whether it's bond friendly or not," a trader said.

At 11:50, the benchmark R157 bond was trading at 6.640%, from its previous close of 6.605%. The R207 was bid at 7.770% and offered at 7.740% from a previous close of 7.715% and the R186 was trading at 8.275% from its close of 8.235%.

The rand was bid at 7.6812 against the dollar from its previous close of 7.7226.

SA's producer price index (PPI) registered growth of 8.9% year-on-year (y/y) in January from 9.8% y/y in December and 10.1% y/y in November, Statistics SA data released on Thursday showed.

The average annual change for 2011 was 8.4% compared with 6.0% in 2010.

The PPI, on a monthly basis, was 0.3% after decreasing slightly between November and December 2011.

The PPI was expected to clock in at 9.5% y/y in January, a survey by I-Net Bridge found.

Forecasts among five leading economists surveyed ranged from 8.8% y/y to 9.6% y/y.

Foreigners were net buyers of R2.178bn of South African bonds including repo transactions on Wednesday after net purchases of R1.084bn of local bonds on Tuesday, data released by the JSE shows.

Nominal cumulative volume was R80.775bn on Wednesday from R204.873bn on Tuesday.

Foreigners were net buyers of R2.179bn of South African bonds excluding repo transactions on Wednesday, after net purchases of R906.933m of local bonds on Tuesday.

For the year to date foreigners have been net buyers of R12.184bn of local bonds, excluding repo transactions. In 2011 they were net buyers of R47.359bn worth of local bonds, excluding repo transactions.

In the year to date foreigners have been net buyers of R10.803bn of local bonds including repo transactions. In 2011 they bought R37.501bn of local bonds.