Fin24

Bonds firm on foreign interest

2011-04-15 13:41

Johannesburg - South African bonds were firmer in midday trade on Friday, which a trader said was on the back of interest from offshore players.

By 11:50, the benchmark R157 bond was trading at 7.730% from its previous close of 7.770%, while the R207 was bid at 8.490%, from its previous close of 8.520. The R186 was bid at 8.745% from its previous close of 8.780%.

The rand was bid at R6.8250 to the dollar from its previous close of R6.8348.

"I believe there was some buying from offshore late last night and we saw the effect this morning with guys trying to get some of their stock back. The interest seems to be in the ultra-long end of the curve around the R186s," a local trader said.

Standard Bank analysts noted in a report that, despite a degree of intra-day volatility, SA's long rates weren't too far removed from their post-auction levels.

However, the analysts noted that the rand remained under pressure, while US treasury yields were lower, as was spot Brent.

"At face value, the pressure for a short-term valuation adjustment is growing - but the immediate breakout direction isn't clear. Nevertheless, over the medium term, a flatter long-end bond curve from current levels doesn't appear sustainable to us," they said.

Foreigners were net buyers of R878.348m of South African bonds including repo transactions on Thursday after net purchases of R832.539m of local bonds on Wednesday, Bond Exchange of South Africa statistics show.

Nominal cumulative volume was R34.824bn on Thursday from R47.622bn on Wednesday.

Foreigners were net buyers of R968.934m of South African bonds excluding repo transactions on Thursday after net purchases of R828.826m of local bonds on Wednesday.

For the year to date, foreigners have been net buyers of R1.477bn worth of local bonds, excluding repo transactions. In 2010 foreigners bought net R57.064bn worth of local bonds, excluding repo transactions.

For the year to date for total transactions, including repo transactions, foreigners have been net sellers of R3.681bn of local bonds. In 2010 they bought net R44.541bn worth of bonds.