SA bonds softer in midday trade

Independent Newspapers

File photo: Leon Nicholas

Johannesburg‚ July 5 (I-Net Bridge) - The South African bond market was a touch softer in quiet midday trade on Thursday‚ as investors waited for the announcement of the decisions of the European Central Bank (ECB) and the Bank of England (BoE) in the early afternoon SA time.

"We are just marking time until the ECB decides whether it cuts by 25 or 50 basis points‚ which could send the euro and rand weaker‚" a local trader said.

At 11:45‚ the benchmark R157 bond was trading at 5.950% from Wednesday's close of 5.930% and Tuesday's close of 5.950%. The R207 was bid at 7.010% and offered at 6.980% from a previous close of 6.965% and the R186 was trading at 7.870% from its previous close of 7.815%.

The rand was bid at R8.1502 against the dollar from Wednesday's close of R8.1304 and Tuesday's close of 8.0697.

Dow Jones Newswires said market participants were waiting to see what policy steps the eurozone central bank was going to take. More than two-thirds of the 46 banks and think tanks polled by Dow Jones Newswires forecast that the ECB will cut its one-week lending rate 0.25 percentage point to 0.75% from the current 1.0% and nine are predicting a deeper cut to 0.50%.

European leaders‚ who last week set an end-of-the-year deadline to create a new supervisor to oversee eurozone banks‚ have set themselves an ambitious timetable that some officials admit they will struggle to meet.

Setting up a powerful eurozone banking supervisor‚ a significant move toward closer economic union within the 17-nation currency bloc‚ was a German condition for its agreement to allow the bloc's bailout fund to recapitalise banks without first lending the money to their host government.

Foreigners were net sellers of R109.114 million of South African bonds including repo transactions on Wednesday after net purchases of R1.818 billion of local bonds on Tuesday‚ data released by the JSE show.

Nominal cumulative volume was R71.014 billion on Wednesday from R196.293 billion on Tuesday.

Foreigners were net sellers of R424.079 million of South African bonds excluding repo transactions on Wednesday after net purchases of R1.516 billion of local bonds on Tuesday.

For the year to date foreigners have been net buyers of R52.349 billion of local bonds‚ excluding repo transactions. In 2011 they were net buyers of R47.359 billion worth of local bonds‚ excluding repo transactions.

In the year to date foreigners have been net buyers of R51.134 billion of local bonds including repo transactions. In 2011 they bought R37.501 billion worth of local bonds. -I-Net Bridge News

(09:45 GMT)

R157 (2016) 5.950% 5.935% - 5.980% 5.930%

R207 (2020) 7.010% bid 6.985% - 7.020% 6.965%

R186 (2026) 7.870% 7.830% - 7.885% 7.815%

Bond Exchange of South Africa (in billions of rand)

Wednesday Tuesday

Nominal cumulative volume R71.014 R196.293

Net foreign purchases/(sales) (R0.109) R1.818

Net foreign purchases/(sales) in 2012: R51.134 billion

Net foreign purchases in 2011: R37.501 billion

Repo rate: 5.5%