Bonds smidgen softer ahead of budget

Johannesburg - South African bonds were marginally weaker in midday trade on Wednesday as traders marked time ahead of this afternoon's budget speech by Finance Minister Pravin Gordhan.

Consumer inflation data for January met with a muted response from the market for, although worse than generally expected, it was not far off expectations.

Consumer price inflation came in at 6.3% year-on-year, while 6.2% had been expected by economists polled by I-Net Bridge.

At 11:50, the benchmark R157 bond was trading at 6.620%, from its previous close of 6.605%. The R207 was bid at 7.755% and offered at 7.725% from a previous close of 7.720%, and the R186 was bid and offered at 8.230% from its close of 8.215%.

The rand was bid at 7.7203 against the dollar from its previous close of 7.7313.

"There's some curve flattening going on, but I think it's just positioning before the budget speech," a local bond trader said.

Foreigners were net buyers of R1.084bn of South African bonds including repo transactions on Tuesday after net sales of R1.974bn of local bonds on Monday, data released by the JSE show.

Nominal cumulative volume was R204.873bn on Tuesday from R57.525bn on Monday.

Foreigners were net buyers of R906.933m of South African bonds excluding repo transactions on Tuesday after net sales of R1.975bn of local bonds on Monday.

For the year to date foreigners have been net buyers of R10.005bn 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 R8.625bn of local bonds including repo transactions. In 2011 they bought R37.501bn of local bonds.