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Offshore interest boosts bonds

Johannesburg - South African bonds were up to 11 basis points firmer in late trade on Friday, on the back of foreign interest for local bonds.

By 15:50, the benchmark R157 bond was trading at 7.660% from its previous close of 7.770%, while the R207 was bid at 8.450%, from its previous close of 8.520. The R186 was trading at 8.720% from its previous close of 8.780%.

The rand was bid at R6.8761 to the dollar from its previous close of R6.8348.

"It looks like the foreigners are still active, we can't see the numbers yet, but chatting to the guys, that seems to be the story. As far as the inflation linked auction - they all cleared at market, the demand was good, but not as great as last week, we're seeing some attention back on those inflation-linkers again - mainly on the R212s," a local trader said.

No bids were accepted for the R211 bonds at the Reserve Bank's inflation-linked bond auction on Friday.

Only two bids totalling R20m were received for the six-year bonds.

However, bids totalling R685m were received for R450m worth of R212 bonds and bids totalling R250m were received for R150m worth of R202 bonds.

Earlier in the day, another trader said bonds were firmer on the back of interest from offshore players.

"I believe there was some buying from offshore late last night and we saw the effect this morning with guys trying to get some of their stock back. The interest seems to be in the ultra-long end of the curve around the R186s," a local trader said.

Foreigners were net buyers of R878.348m of South African bonds including repo transactions on Thursday after net purchases of R832.539m of local bonds on Wednesday, Bond Exchange of South Africa statistics show.

Nominal cumulative volume was R34.824bn on Thursday from R47.622bn on Wednesday.

Foreigners were net buyers of R968.934m of South African bonds excluding repo transactions on Thursday after net purchases of R828.826m of local bonds on Wednesday.

For the year to date, foreigners have been net buyers of R1.477bn 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 R3.681bn of local bonds. In 2010 they bought net R44.541bn worth of bonds.
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