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Longer-dated bonds tad weaker

Johannesburg - South African longer-dated bonds were a touch weaker in midday trade on Friday, while other major bonds were mostly flat.

By 11:50, the benchmark R157 bond was trading at 7.745% from its previous close of 7.750%, while the R207 was bid at 8.625% from its previous close of 8.610%. The R186 was bid at 8.925 from its previous close of 8.890%.

The rand was bid at 6.8974 to the dollar from its previous close of 6.8681.

"The rand is pushing up to the 6.90 level; it closed at 6.86, so it could be one reason why we're a bit weaker. We strengthened towards the 7.73 level and there were a couple of offers and that pushed the market back up. We'll probably trade in the same kind of range for the rest of the day, there's not much else to go on," said a local trader.

Earlier, Standard Bank said in a report that the unchanged repo rate was widely expected, but the market viewed SA Reserve Bank (Sarb) governor Gill Marcus's statement positively.

"The Forward Rate Agreement (FRA) market has relaxed somewhat its expected profile of tightening. At the beginning of the week, the 21x24 was at 8.27%, this is now 8.10%. Similarly, the 12x15 was at 6.98%; this is now 6.85%. Longer rates have also fallen, with the R157 around 7.75% from as high a close of 7.90% last week. This is likely off the announcement of a peak in the expected CPI rate in the first quarter of 2012, before falling again, according to the Sarb's latest inflation forecast," Standard Bank said.

"However, for long-end yields, the ranges obtained since mid-January remain intact and Standard Bank expects this to remain the case in the near term," it added.

Foreigners were net buyers of R2.551bn of South African bonds including repo transactions on Thursday, after net purchases of R79.761m of local bonds on Wednesday, Bond Exchange of South Africa statistics show.

Nominal cumulative volume was R48.273bn on Thursday from R70.434bn on Wednesday.

Foreigners were net buyers of R2.977bn of South African bonds excluding repo transactions on Thursday, after net purchases of R91.173m of local bonds on Wednesday.

For the year to date, foreigners have been net sellers of R11.014bn worth of local bonds, excluding repo transactions. In 2010 foreigners bought net R57.064bn worth of local bonds, excluding repo transactions.

For the year to date for total transactions, including repo transactions, foreigners have been net sellers of R13.817bn of local bonds. In 2010 they bought net R44.541bn worth of bonds.

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