Bonds mixed in choppy session

Johannesburg - South African bonds were mixed in quiet midday trade on Wednesday. The R186s and R207s were a bit weaker, while the benchmark R157s were slightly firmer.

At 11:50, the benchmark R157 bond was trading at 6.500%, from its previous close of 6.520%. The R207 was bid at 7.710% and offered at 7.680% from a previous close of 7.700% and the R186 was bid at 8.180% and offered at 8.150% from its close of 8.150%.

The rand was bid at 7.5414 against the dollar from its previous close of 7.5579.

"It's very difficult to read the market at the moment - I would have thought we'd be trading a touch lower here. It does feel as though the market is a bit long and guys are dumping bonds," a trader said.

Earlier, RMB said that the curve remained bid, having significant room to flatten, as the market looked ahead to the budget announcement in two weeks' time.

"With players in the market hinging bets on a positive surprise at the announcement and generally feeling that funding pressures may not be as severe as previously expected," RMB analysts said.

Foreigners were net buyers of R1.499bn of South African bonds including repo transactions on Tuesday after net purchases of R1.746bn of local bonds on Monday, data released by the JSE shows.

Nominal cumulative volume was R213.489bn on Tuesday from R70.545bn on Monday.

Foreigners were net buyers of R1.496bn of South African bonds excluding repo transactions on Tuesday after net purchases of R1.745bn of local bonds on Monday.

For the year to date foreigners have been net buyers of R10.598bn 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 R9.770bn of local bonds including repo transactions. In 2011 they bought R37.501bn of local bonds.