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Bonds in limbo‚ awaiting budget

Feb 11 2013 12:46 I-Net Bridge

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Johannesburg - The South African bond market was little moved at noon on Monday despite the softer rand.

“The benchmark R186 was trading one basis point weaker‚ with bond yields relatively unchanged from Friday‚ ignoring the slight weaker rand and awaiting the budget speech‚” said Steve Arnold‚ head of bonds at Investec.

“There is a very large duration bond auction tomorrow‚ and if there is low interest in the auction‚ this could cause bond yields to climb‚” he said.

At 12:00 the benchmark R186 was bid at 7.305% and offered at 7.275% from 7.280% at Friday’s close. The R157 was bid at 5.320% and offered at 5.300% from 5.290% at its previous close and the R207 was bid at 6.295% and offered at 6.265% from its previous close of 6.260%.

The rand was last bid at R8.9014/$ from R8.8693 overnight.

Rand Merchant Bank said in a note that Finance Minister Gordhan would be hard pressed to pull some good news rabbits out of the hat on budget day‚ which may sour sentiment towards South African government bonds both locally and more importantly from an offshore perspective.

“The budget will be the focus point for the next few weeks‚ especially with this coming week very low on data with only retail sales‚ manufacturing and gold production numbers due for release‚” the bank said. 

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