Johannesburg - South African bonds were soft in
midday trade on Wednesday on the back of a weaker euro ahead of a
statement from the European Union leaders' summit today. April inflation
data showed a slight up-tick to 6.1% year on year (y/y) from 6.0% y/y
in March. The I-Net Bridge consensus forecast was for 6.2% y/y.
At 11:32, the benchmark R157 bond was trading at 6.390%, from
Tuesday's close of 6.315% and Monday's close of 6.340%. The R207 was bid
at 7.610% and offered at 7.580% from a previous close of 7.515% and the
R186 was trading at 8.320% from its close of 8.250%.
The rand was bid at 8.3883 against the dollar from yesterday's close of 8.3259 and Monday's close of 8.2088.
"The inflation data came in as expected, so it had no impact
on the market. What is driving the market is the commentary out of
Europe," a trader said.
Eskom allocated R100m worth of its EL28 after receiving
bids worth R298m, while the ES33 bond attracted R460m for
the R200m on offer. The clearing yield for the EL28 was 2.73%
and for the ES33 is was 9.525%.
Dow Jones Newswires reported that demand from eurozone banks
for the European Central Bank's (ECB) three-month, or 84-day, dollar
liquidity supply nearly doubled on Wednesday, while demand for the
one-week dollar liquidity supply remained unchanged, a likely sign that
dollar funding on the interbank market is in demand for longer
maturities as eurozone uncertainties mount.
The ECB said it allotted $10.268bn in its three-month,
fixed-rate, dollar, swap operation, up from $5.199bn allotted in
April, when it last offered the same operation. It allotted $300m
at its seven-day, fixed-rate, dollar, swap operation, steady from last
Seventeen banks requested dollar liquidity against
ECB-eligible collateral at a fixed rate of 0.66% at the three-month
operations, the ECB said, up from 11 at the last offer. One bank asked
for one-week dollar liquidity, also at 0.66%, unchanged from last week.
The ECB never publishes the identity of the banks it lends dollars to
via the facility.
Dollar liquidity became less available in the second half of
last year as a result of rising worries among US banks over the
eurozone's sovereign debt crisis. On November 30, the world's major
central banks moved in concert to provide cheap dollars to banks after
dollar funding stress intensified.
Since then, dollar funding stress has eased due partly to the
ECB flooding the eurozone banking system with euro liquidity through its
European banks need dollars to fund their non-euro activities.
To provide the dollar loans, the ECB borrows the same amount from the
US Federal Reserve.
Foreigners were net buyers of R767.633m of South
African bonds including repo transactions on Tuesday after net sales of
R684.646m of local bonds on Monday, data released by the JSE
Nominal cumulative volume was R22.833bn on Tuesday from R91.819bn on Monday.
Foreigners were net buyers of R761.798m of South
African bonds excluding repo transactions on Tuesday after net sales of
R689.472m of local bonds on Monday.
For the year to date foreigners have been net buyers of
R38.590bn of local bonds, excluding repo transactions. In 2011
they were net buyers of R47.359bn worth of local bonds, excluding
In the year to date foreigners have been net buyers of R34.628bn of local bonds including repo transactions. In 2011 they bought
R37.501bn of local bonds.