Bonds weaken on profit-taking

Johannesburg - South African bond yields were weaker in late trade on Thursday, falling prey to some profit-taking.

By 15:50 the benchmark R157 bond was bid at 7.260 from 7.200 at its close on Wednesday. The benchmark R207 was bid at 7.965% from 7.880%, while the R186 was at 8.010% from 7.970%.

The rand was bid at R7.2352 to the dollar from R7.2815 at its previous close.

"After strong gains in the past week, bonds have weakened on some profit-taking. The currency is holding its line and not having much effect on the bond market at the moment," said a local trader

Earlier in the day Nedbank Capital noted that the bond market remains in vogue, having registered its biggest monthly gain in August since December 2008.

"Strong foreign fund inflows and prospects for a 50 basis point repo rate cut following next week's MPC meeting continue to buoy yields. The strong rand has added to a positive outlook with the government funding programme proving relatively easily manageable," they said.

Foreigners were net buyers of R1.281bn of South African bonds including repo transactions on Wednesday after net purchases of
R1.686bn of local bonds on Tuesday, Bond Exchange of South Africa statistics show.

Nominal cumulative volume was R21.270bn on Wednesday from R41.605bn on Tuesday.

Foreigners were net buyers of R1.513bn of South African bonds excluding repo transactions on Wednesday after net purchases of R2.364m of local bonds on Tuesday.

In the year to date foreigners have been net buyers of R70.621bn worth of local bonds, excluding repo transactions.

So far for total transactions, including repo transactions, foreigners have been net buyers of R63.114bn worth of bonds.

In 2009 foreigners were net buyers of R27.755bn worth of local bonds, excluding repo transactions, while for total transactions, including repo transactions, foreigners were net sellers of R2.424bn worth of bonds.