Bonds off worst levels after auction

Johannesburg - South African bonds were in weaker territory during midday trade on Tuesday, but off the sessions worst levels after the weekly government bond auction.

The National Treasury received bids totalling R2.12bn for R500m worth of R204 bonds at a clearing yield of 7.490%, R2bn for R500m worth of R207 bonds at a clearing yield of 7.735% and R2.59bn for R1.1bn worth of R213 bonds at a clearing yield of 8.690%.

At 11:50, the benchmark R157 bond was trading at 6.600%, from its previous close of 6.565%. The R207 was bid at 7.765% and offered at 7.735% from a previous close of 7.745% and the R186 was trading at 8.290% from its close of 8.230%.

The rand was bid at 7.7406 against the dollar from its previous close of 7.6985.

"From what we can see from the last three auctions, these guys love buying at a loss - it escapes me.

"One local and one offshore house have put out favourable budget expectations for next week, which might explain - if it materialises why people are accumulating bonds. I think we'll trade higher from here for the rest of the session," a senior bond trader commented.

Foreigners were net buyers of R1.046bn of South African bonds including repo transactions on Monday, after net purchases of R2.417bn of local bonds on Friday, data released by the JSE shows.

Nominal cumulative volume was R56.958bn on Monday from R44.617bn on Friday.

Foreigners were net buyers of R1.045bn of South African bonds excluding repo transactions on Monday after net purchases of R2.417bn of local bonds on Friday.

For the year to date foreigners have been net buyers of R9.948bn 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 R9.125bn of local bonds including repo transactions. In 2011 they bought R37.501bn of local bonds.