* Bonds supported by foreign buying
* Rand breaks through resistance at 8.20 vs. dollar
JOHANNESBURG, June 19 (Reuters) – Yields on South African
government bonds dropped to multi-month lows on Tuesday,
extending a three-week rally as investors returned to riskier
emerging market assets and helped push the rand though a firm
resistance level against the dollar.
The three-year bond yield dropped to a record 6.05
percent while the yield on the 14-year issue hit an
eight-month low of 8.02 percent.
“The whole market has got a little bit excited. This has all
been foreign-driven. We’ve seen gigantic foreign inflows over
the last two weeks or so and its driven all bond yields down,”
said Malcolm Charles, a fixed income portfolio manager at
Investec.
Offshore accounts picked up 3.1 billion rand ($377 million)
of local debt last week. Year-to-date, foreigners have bought 11
billion rand more in 2012 than they did in the same period last
year.
“They obviously think the world is a perfect place to be
investing in risk assets again,” Charles said.
Earlier in the session, the Treasury sold 2.1 billion rand
in 2017, 2021 and 2023 paper at lower yields
than at their previous sales.
The new 2023 issue cleared at 7.77 percent and attracted the
most interest, with a 4.18 times bid-to-cover ratio.
Continued…
