Johannesburg - South African bonds remained subdued in
listless trade on Thursday with little in the way of fresh news to provide
direction.
There was no immediate reaction from the market to the news that Moody's
Investors Service has assigned an A3 rating to the new $2 billion, 5.5% global
bond issue from the Republic of South Africa.
Dealers said that in the absence of any other drivers, bonds were likely to
be watching the rand today.
By 12:00 the short-term government R154 bond was bid at 7.060% and offered
at 7.040% after closing at 7.050% on Wednesday and the medium-term R157 was at
8.175% from 8.170% at its previous close. The long-term R186 was bid at 8.965%
and offered at 8.950% from 8.945% previously.
The rand was bid at 7.5074 to the dollar from 7.4840 at its previous close.
"With no economic news out, it's going to be a pretty quiet session. We'll
probably watch the rand for direction," a local bond trader said.
"There is just no real conviction by clients to be buying at these levels.
So the market is very light at the moment," another trader added.
In its rating review of South Africa's $2bn bond issue on Thursday,
Moody's said that the government will continue to have relatively low external
debt vulnerability, even with the stepped-up issuance, since it is starting
from a low base. As a proportion of its total debt, foreign currency debt will
actually decline because of increased borrowing requirements domestically. At a
national level, external vulnerability is also quite low compared to the
country's A-rated peers, in spite of ongoing current account deficits.
It added that the Reserve Bank of South Africa has been accumulating
foreign exchange in the past seven years when capital account surpluses
regularly exceeded the current account deficits, and its net reserves position
is in surplus by nearly $39bn.
Foreigners were net buyers of R2.965bn of South African bonds
including repo transactions on Wednesday, after net purchases of R1.154bn of local bonds on Tuesday, Bond Exchange of South Africa statistics show.
Nominal cumulative volume was R41.102bn on Tuesday from
R119.845bn on Tuesday.
Foreigners were net buyers of R3.021bn of South African bonds
excluding repo transactions on Wednesday, after net purchases of R1.155bn of local bonds on Tuesday.
In the year to date foreigners have been net buyers of R7.936bn
worth of local bonds, excluding repo transactions.
So far for total transactions, including repo transactions, foreigners have
been net buyers of R10.976bn 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