Johannesburg – South African bonds were off their worst levels in midday trade on Tuesday after a successful weekly government bond auction at 11:00.
The new R2048 bond attracted 37 bids worth R1.63bn for the R500m on offer.
“We saw excellent demand for the new R2048 bond, so that has helped the long end,” a local trader said.
At 11:45, the benchmark R157 bond was trading at 6.085% from a morning worst level of 6.135%, Monday’s close of 6.070% and Friday’s close of 6.010%. The R207 was bid at 7.265% and offered at 7.245% from a previous close of 7.250% and the R186 was trading at 8.080% from its previous close of 8.080%.
The rand was bid at R8.4587 against the dollar from Monday’s close of R8.4661 and Friday’s close of R8.4113.
Dow Jones Newswires reported that Spain's government was mulling more strict limits to the number of goods and services subject to reduced value-added tax but had not made any decision on the issue yet.
Madrid is studying the feasibility of increasing the VAT rate to a level closer to the basic 18% rate for sectors now enjoying lower rates of 4% and 8%, as a way to boost VAT receipts in line with European Commission requests.
Sectors now enjoying a reduced rate include media, foodstuffs and transport.
The European Commission has long recommended that Spain increases the VAT rate to help narrow the country's budget deficit, but Spain's government has so far balked at the prospect, saying a higher rate may have a negative effect on domestic consumption.
Spain already increased its VAT rate from 16% in 2010, a move that was unpopular but resulted in higher receipts last year.
Foreigners were net sellers of R2.016bn of South African bonds including repo transactions on Monday after net purchases of R1.905bn of local bonds on Friday‚ data released by the JSE show.
Nominal cumulative volume was R91.297bn on Monday from R75.703bn on Friday.
Foreigners were net sellers of R2.283bn of South African bonds excluding repo transactions on Monday after net purchases of R1.904bn of local bonds on Friday.
For the year to date foreigners have been net buyers of R43.592bn 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 R39.165bn of local bonds including repo transactions. In 2011 they bought R37.501bn worth of local bonds.