Bonds gain on narrower deficit

Johannesburg - Government bonds gained on Wednesday after Finance Minister Pravin Gordhan forecast a narrower-than-expected budget deficit for the 2012/13 financial year.

The longer end of the curve was firmer, with the yield on the 2026 bond down 4 basis points to 8.19% from 8.28% just before Gordhan started his speech in parliament.

The 2015 yield fell to 6.595% from 6.655% beforehand.

Gordhan said the deficit would narrow to 4.6% of gross domestic product in the financial year ending March 2013 from a 4.8% shortfall in 2011/12. Analysts expected 5.4%.