* Speculators get out of long bond positions
* Trigger a sell-off to 2-month low prices
JOHANNESBURG, Sept 17 (Reuters) – South African government
bonds weakened on the longer end of the yield curve as a slide
that begun after poor current account data last week combined
with negative sentiment around a mining labour strife on Monday
to drive yields to 2-month highs.
The rand hit a one-week low on the day as local indicators
discouraged investors against holding the currency.
Bond yields rose to a month high on the 2021 and
2023 paper, while that on the benchmark R186 climbed
7.695 percent, its worst in two months.
“There was a heavy offshore position in the R209 and R186
area and they’ve all liquidated since the current account number
last week,” said Mark Southworth, a bond trader for Citi in
Johannesburg.
Constant weekly issuance by the government also exerts
downward pressure on bond prices and the Treasury is selling the
2023, 2041 and 2048 debt on Tuesday, all
paper in the middle to back end of the curve that is already
crowded by foreign investors.
Foreign accounts sold 2.8 billion rand in local bonds last
week, the biggest weekly sell-off since a month ago according to
data from the securities exchange.
“The positioning in long South African bonds was too heavy.
The current account deficit (happened) and the mining turmoil
didn’t help,” Citi’s Southworth said.
The rand was at 8.2350 to the dollar at 1621 GMT,
0.3 percent weaker than Friday’s New York close of 8.21.
“Both the deteriorating external imbalances and the
intensifying labour unrest represent clear risks for a weaker
rand,” said Danske Bank’s emerging market analysts in a note,
adding that as the rand was already over-valued, there was
limited space for strength in South Africa’s currency.
(Reporting by Xola Potelwa; editing by Ron Askew)
© Thomson Reuters 2012 All rights reserved
