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Bonds firm after auction

Jan 22 2013 13:03 I-Net Bridge

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Johannesburg - The South African bond market was firm in quiet midday trade on Tuesday after the weekly bond auction at 11:00.

The National Treasury allotted R700m worth of R186 bonds at a clearing yield of 7.200%‚ R700m worth of R213 bonds at a clearing yield of 7.760% and R700m worth of R214 bonds at a clearing yield of 8.060%.

The bids received amounted to R2.285bn‚ R1.38bn and R1.235bn respectively.

“We saw good demand at the auction‚ so that has helped the market to keep its firm tone‚ but there was a little bit of selling after the auction. The Bank of Japan policy change has had little impact so far‚” a local bond dealer said.

At 11:37 the benchmark R186 was trading at 7.230% from 7.235% at Monday’s close. The R157 was trading at 5.315% from 5.330% at its previous close and the R207 was bid at 6.260% and offered at 6.230% from its previous close of 6.245%.

The rand was last bid at R8.8392/$ from R8.8559/$ at Monday’s close.

Dow Jones Newswires reported that the Bank of Japan committed itself to a 2% inflation target and an open-ended asset purchasing programme‚ pledging to carry on purchasing financial assets as long it considers it necessary.

Japan's Prime Minister Shinzo Abe came to power last month with plans to end the country's long term deflation problem‚ which has resulted in downward pressure on the yen in recent months.

The central bank's announcement was "pretty much in line with expectations. There was not much of a surprise as most of it was already well telegraphed in advance‚" said Wee-Khoon Chong‚ senior interest rate strategist at Societe Generale in Hong Kong.

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