Johannesburg - Bonds were between four and five basis points softer on Tuesday as supply issues continue to weigh on the market. The weaker rand might also be a contributing factor, a trader noted.

By 16:00 the short-term government R154 bond was bid at 7.145% and offered at 7.125% after closing at 7.090% on Monday and the medium-term R157 was at 8.250% from 8.200% at its previous close. The long-term R186 was at 9.080% from 9.040% previously.

The rand was bid at R7.4429 to the dollar from R7.3868 at its previous close.

This is a particularly busy week for bond issuances, with Investec having issued today, African Bank and Eskom tomorrow and DBSA on Thursday.

A trader said that the weekly government bond auction had been well received. The South African Treasury on Tuesday allotted R700m worth of R203 bonds at a clearing yield of 8.770% and R1.4bn worth of R207 bonds at a clearing yield of 8.980%.

Looking ahead to the rest of the week, manufacturing and mining production are the main focus.

Data released Tuesday showed the RMB/BER Business Confidence Index (BCI) jumped by a further 15 points in the first quarter of 2010 to a level of 43. This followed a five point rise to 28 during the fourth quarter of 2009. This is the single biggest increase between two consecutive quarters in 16 years, RMB economists said on Tuesday.

Also, at 43 the BCI is back to the same level which prevailed before the global financial market crisis erupted around 18 months ago.

However, confidence remains in "net negative" territory - below 50 index points - and although the mood improved across all five of the sectors surveyed, increases were only particularly large in the cases of wholesale and new vehicle trade, where index levels surged by 23 and 31 points respectively.

Foreigners were net buyers of R250.116m of bonds including repo transactions on Monday, after net purchases of R167.135m of local bonds on Friday, Bond Exchange of South Africa statistics show.

Nominal cumulative volume was R39.028bn on Monday after R25.090bn on Friday.

Foreigners were net buyers of R467.038m of bonds excluding repo transactions on Monday, after net purchases of R165.715m of local bonds on Friday.

In the year to date foreigners have been net buyers of R11.173bn worth of local bonds, excluding repo transactions.

So far for total transactions, including repo transactions, foreigners have been net buyers of R12.131bn worth of bonds.

In 2009 foreigners were net buyers of R27.346bn worth of local bonds, excluding repo transactions, while for total transactions, including repo transactions, foreigners were net sellers of R2.424bn worth of bonds.

- I-Net Bridge