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Johannesburg - The domestic capital market
continued firmer in midday trade on Wednesday as foreign buying
continued following Tuesday's news that South African government bonds
were likely to be included in the World Government Bond Index (WGBI).
Bond yields firmed the most in more than three years on Tuesday after investment banking firm Citigroup said that SA government bonds were entering a monitoring period for inclusion in the index from October 1. The rand appreciated 16 cents to 7.80/US$ following the news.
At 11:52, the benchmark R157 bond was trading at 6.425% from its previous close of 6.500%. The R207 was bid at 7.525% and offered at 7.505% from a previous close of 7.600% and the R186 was trading at 8.080% from its close of 8.180%.
The rand was bid at 7.8271 against the dollar from its previous close of 7.7893.
"The main factor is continued foreign buying, as the March consumer inflation rate was dead on consensus," a domestic bond trader said.
The increase in SA's consumer price index (CPI), which is used by the SA Reserve Bank (SARB) for its inflation target, was 6.0% year on year (y/y) in March from 6.1% y/y in February and 6.3% y/y in January, Statistics SA (Stats SA) said on Wednesday.
The inflation rate was expected to have come in at 6.0% y/y, according to a survey of leading economists by I-Net Bridge. Forecasts among the economists ranged from 5.4% to 6.3%.
Food and non-alcoholic beverage inflation slowed to 8.6% y/y in March 2012 from 9.6% y/y in February 2012.
The National Treasury will auction R1.1bn worth of R203 bonds, R500m worth of R209 bonds and R500m worth of R214 bonds on April 24.
Absa Capital said in a morning report that the message for the market post-announcement must be one of trend support for the rand and increased appetite across the curve from offshore participants.
"That implies 'stronger' and 'lower and flatter' for our markets," the analysts said.
Foreigners were net buyers of R7.790bn of South African bonds including repo transactions on Tuesday after net sales of R878.250m of local bonds on Monday, data released by the JSE shows.
Nominal cumulative volume was R256.745bn on Tuesday from R45.465bn on Monday.
Foreigners were net buyers of R7.787bn of South African bonds excluding repo transactions on Tuesday after net sales of R879.547m of local bonds on Monday.
For the year to date foreigners have been net buyers of R25.298bn 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 R22.337bn of local bonds including repo transactions. In 2011 they bought R37.501bn of local bonds.
Bond yields firmed the most in more than three years on Tuesday after investment banking firm Citigroup said that SA government bonds were entering a monitoring period for inclusion in the index from October 1. The rand appreciated 16 cents to 7.80/US$ following the news.
At 11:52, the benchmark R157 bond was trading at 6.425% from its previous close of 6.500%. The R207 was bid at 7.525% and offered at 7.505% from a previous close of 7.600% and the R186 was trading at 8.080% from its close of 8.180%.
The rand was bid at 7.8271 against the dollar from its previous close of 7.7893.
"The main factor is continued foreign buying, as the March consumer inflation rate was dead on consensus," a domestic bond trader said.
The increase in SA's consumer price index (CPI), which is used by the SA Reserve Bank (SARB) for its inflation target, was 6.0% year on year (y/y) in March from 6.1% y/y in February and 6.3% y/y in January, Statistics SA (Stats SA) said on Wednesday.
The inflation rate was expected to have come in at 6.0% y/y, according to a survey of leading economists by I-Net Bridge. Forecasts among the economists ranged from 5.4% to 6.3%.
Food and non-alcoholic beverage inflation slowed to 8.6% y/y in March 2012 from 9.6% y/y in February 2012.
The National Treasury will auction R1.1bn worth of R203 bonds, R500m worth of R209 bonds and R500m worth of R214 bonds on April 24.
Absa Capital said in a morning report that the message for the market post-announcement must be one of trend support for the rand and increased appetite across the curve from offshore participants.
"That implies 'stronger' and 'lower and flatter' for our markets," the analysts said.
Foreigners were net buyers of R7.790bn of South African bonds including repo transactions on Tuesday after net sales of R878.250m of local bonds on Monday, data released by the JSE shows.
Nominal cumulative volume was R256.745bn on Tuesday from R45.465bn on Monday.
Foreigners were net buyers of R7.787bn of South African bonds excluding repo transactions on Tuesday after net sales of R879.547m of local bonds on Monday.
For the year to date foreigners have been net buyers of R25.298bn 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 R22.337bn of local bonds including repo transactions. In 2011 they bought R37.501bn of local bonds.
