Publications
Partners
Johannesburg – South African bonds firmed in afternoon trade on Tuesday on the back of a stronger rand.
“Bonds have strengthened on the combination of a stronger rand and lower European bond yields‚” a local bond trader said.
At 15:53‚ the benchmark R157 bond was trading at 5.560% from 5.610% at Monday’s close and 5.690% at Friday’s close. The R207 was bid at 6.650% and offered at 6.625% from its previous close of 6.695%‚ and the R186 was trading at 7.530% from its previous close of 7.590%.
The rand was bid at R8.2333/$ from R8.3197 at Monday’s close.
Konrad Reuss‚ Standard and Poor’s (S&P's) managing director for sub-Saharan Africa told I-Net Bridge that Marikana had had no impact as yet.
“Marikana is a concern as that is the kind of worry about SA’s social and structural challenges that is already behind our negative rating outlook. Policy and political responses are hopefully not leading us down the wrong path in terms of populism‚ intervention and deterring investment‚” he said.
Credit ratings agencies Moody’s (in November 2011)‚ Fitch (in January 2012) and Standard & Poor’s (March 2012) changed their outlooks on South African government debt from stable to negative‚ in part due to concern that increasing social welfare transfers due to the unemployment rate being above 20% would lead to a fiscally unsustainable path.
In the February 2012 budget‚ the Treasury forecast that the government would return to a primary surplus of 0.3% in 2014-15 after running a primary deficit of an estimated 1.9% in 2012-13. Before 2009 the government ran a primary surplus.
The fiscal surplus jumped to R18.2bn in June 2012 from R12.6bn in June 2011. The revenue increase in the first three months of the 2012/13 fiscal year was 13.9% year on year (y/y) compared with 10.5% for the full 2011/12 fiscal year‚ while expenditure was up only 7.4% after a 10.5% gain in 2011/12.
In international bond news‚ Dow Jones Newswires reported that Spain sold its biggest slice of debt since March with a lower price tag than at last month's auctions for similar maturities.
Hopes for fresh support by the European Central Bank (ECB) for the region's government bond markets helped Spain to sell its biggest slice of debt since March‚ with a lower price tag than a similar auction last month‚ but this upbeat tone did nothing to dent demand for safer bets.
The crisis in the eurozone's weakest countries is at best only half-way finished‚ with Greece and Ireland potentially needing until 2016 to completely shore up their shaky finances‚ Moody's said.
Foreigners were net buyers of R1.115bn of South African bonds including repo transactions on Monday after net sales of R2.332bn of local bonds on Friday‚ data released by the JSE show.
Nominal cumulative volume was R57.354bn on Monday from R48.893bn on Friday.
Foreigners were net buyers of R1.137bn of local bonds excluding repo transactions on Monday after net sales of R2.117bn of local bonds on Friday.
For the year to date foreigners have been net buyers of R64.249bn of local bonds‚ excluding repo transactions. In 2011 they were net buyers of R47.359bn worth of local bonds‚ excluding repo transactions.
In the year to date foreigners have been net buyers of R63.333bn of local bonds including repo transactions. In 2011 they bought R37.501bn worth of local bonds.
“Bonds have strengthened on the combination of a stronger rand and lower European bond yields‚” a local bond trader said.
At 15:53‚ the benchmark R157 bond was trading at 5.560% from 5.610% at Monday’s close and 5.690% at Friday’s close. The R207 was bid at 6.650% and offered at 6.625% from its previous close of 6.695%‚ and the R186 was trading at 7.530% from its previous close of 7.590%.
The rand was bid at R8.2333/$ from R8.3197 at Monday’s close.
Konrad Reuss‚ Standard and Poor’s (S&P's) managing director for sub-Saharan Africa told I-Net Bridge that Marikana had had no impact as yet.
“Marikana is a concern as that is the kind of worry about SA’s social and structural challenges that is already behind our negative rating outlook. Policy and political responses are hopefully not leading us down the wrong path in terms of populism‚ intervention and deterring investment‚” he said.
Credit ratings agencies Moody’s (in November 2011)‚ Fitch (in January 2012) and Standard & Poor’s (March 2012) changed their outlooks on South African government debt from stable to negative‚ in part due to concern that increasing social welfare transfers due to the unemployment rate being above 20% would lead to a fiscally unsustainable path.
In the February 2012 budget‚ the Treasury forecast that the government would return to a primary surplus of 0.3% in 2014-15 after running a primary deficit of an estimated 1.9% in 2012-13. Before 2009 the government ran a primary surplus.
The fiscal surplus jumped to R18.2bn in June 2012 from R12.6bn in June 2011. The revenue increase in the first three months of the 2012/13 fiscal year was 13.9% year on year (y/y) compared with 10.5% for the full 2011/12 fiscal year‚ while expenditure was up only 7.4% after a 10.5% gain in 2011/12.
In international bond news‚ Dow Jones Newswires reported that Spain sold its biggest slice of debt since March with a lower price tag than at last month's auctions for similar maturities.
Hopes for fresh support by the European Central Bank (ECB) for the region's government bond markets helped Spain to sell its biggest slice of debt since March‚ with a lower price tag than a similar auction last month‚ but this upbeat tone did nothing to dent demand for safer bets.
The crisis in the eurozone's weakest countries is at best only half-way finished‚ with Greece and Ireland potentially needing until 2016 to completely shore up their shaky finances‚ Moody's said.
Foreigners were net buyers of R1.115bn of South African bonds including repo transactions on Monday after net sales of R2.332bn of local bonds on Friday‚ data released by the JSE show.
Nominal cumulative volume was R57.354bn on Monday from R48.893bn on Friday.
Foreigners were net buyers of R1.137bn of local bonds excluding repo transactions on Monday after net sales of R2.117bn of local bonds on Friday.
For the year to date foreigners have been net buyers of R64.249bn of local bonds‚ excluding repo transactions. In 2011 they were net buyers of R47.359bn worth of local bonds‚ excluding repo transactions.
In the year to date foreigners have been net buyers of R63.333bn of local bonds including repo transactions. In 2011 they bought R37.501bn worth of local bonds.
* Follow Fin24 on Facebook, Twitter and Google+.
