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Johannesburg - The National Treasury sold R140m worth of its
2022 inflation-linked bond on Friday, a fraction of what it had planned after
failing to attract enough bids at its first auction of the year.
The Treasury had planned to auction R800m, splitting it
between the 2022 bond, the 2033 and the 2028 issue but investors did not bid
for the 2033 and the 2028 bonds.
The clearing yield on the 2022 bond fell to 2.17% compared
to 2.28% at the last auction on December 9.
"There's been a few sellers around and that filled up a
few other guys that were likely to have bid. Everyone is still unsure about
what's going on so they want to get a feel of what's cooking before they jump
in again," a bond trader from Rand Merchant Bank said.
Market analysts Tradition Analytics said the market should
not read too much in the auction.
"(It) may well simply be a function of a slow start to
the year. As such, it may well be valuable reading more into the data that
follows over coming weeks," it said in a note.
One bond dealer, however, said Friday's auction was
"the worst I've ever seen".
"It can't be because the guys are not back from
holidays because look at Tuesday's auction: over 6 billion in bids for the
vanilla, so the assumption was that this would go fairly well,” he said.
Demand for inflation-linked bonds increased markedly towards
the end of 2011, pushing yields down as investors used these instruments to
hedge against inflation.
Targeted consumer price index inflation hit a 20-month high
of 6.1% year-on-year in November and is expected to stay outside the central
bank's 3% to 6% target band for most of 2012.
Next week will see the first meeting of the Reserve Bank's
monetary policy committee (MPC) and the market is expecting the repo rate to
remain unchanged at 5.5%.
Focus will be on the MPC's statement as analysts are split
on when the next adjustment will be in rates. The central bank left rates
unchanged in 2011, after reducing them by 650 basis points in the two years to
November 2010.
The money market is pricing in a small chance of a rate rise
towards the end of the year. The 6x9 forward rate agreement is at 5.6%,
compared with the repo rate of 5.5%.