Bonds firmer after 'strong' auction

Johannesburg - South African bonds were firmer in midday play on Tuesday, on the back of a well-bid government auction.

At its weekly auction, the National Treasury received bids totalling R4.95bn for R1.1bn worth of R203 bonds at a clearing yield of 7.300%, and bids totalling R2.53bn for R1bn worth of R208 bonds at a clearing yield of 8.850%.

At 11:50, the benchmark R157 bond was trading at 6.635%, from its previous close of 6.660%. The R207 was bid at 7.815% and offered at 7.820% from a previous close of 7.840%, and the R186 was trading at 8.280% from its close on Monday of 8.320%.

The rand was bid at 7.9798 against the dollar from its previous close of 7.9318.

"It was a very good auction; it looks like there's still demand out there. The rates came down about three or four points, the shorter end of the spread didn't do too much though.

"The auction was very well bid, the bid-to-cover-ratio on the R203s was 4.5 and on the R208s a bit less," a Cape Town based-trader said.

Foreigners were net sellers of R1.249bn of South African bonds including repo transactions on Monday after net sales of R295.085m of local bonds on Friday, data released by the JSE show.

Nominal cumulative volume was R73.063bn on Monday from R53.929bn on Friday.

Foreigners were net sellers of R1.252bn of South African bonds excluding repo transactions on Monday after net sales of R296.426m of local bonds on Friday.

For the year to date foreigners have been net buyers of R372.935m 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 sellers of R438.645m of local bonds including repo transactions. In 2011 they bought R37.501bn of local bonds.