* Back end of yield curve rallies
* Rand ends flat, dealers shy away from positions
JOHANNESBURG, June 15 (Reuters) – South African government
bonds firmed on Friday and the back end of the yield curve
rallied as pressure lifted from longer-dated bonds, while
dealers squared positions on the rand ahead of a key Greek
election on Sunday.
The longest maturity bond dropped 11 basis points to 8.73
percent while the three-year benchmark gave up four
basis points to 6.10 percent.
The R186/R157 spread came off 5.5 basis points to end at 202
basis points with the longer yields recovering from heavy
selling this week driven by oversupply concerns from the
Treasury’s switch auctions.
“The yield curve took a lot of pain over the last week.
Treasury’s auctions were partly successful but the curve was
pushed a little too far,” said Steve Arnold, a bond trader at
The recovery was also supported by next week’s issuance
plans where the treasury will issue in the middle of the yield
curve, giving some respite to longer-dated paper which has
featured heavily in recent auctions.
“The bonds on offer are all belly stock so Treasury might
hang off issuing longer-dated bonds in the Tuesday auction while
they grow the size of the new 2023 bond.”
The government announced it will issue some of its new
11-year bond along with 2017 and 2021 paper on