JOHANNESBURG, June 11 (Reuters) – South African government
bonds rose on Monday and the rand strengthened, partly buoyed by
news that from October local government bonds will be included
in Citigroup’s World Government Bond Index (WGBI).
The rand also firmed as it tracked a stronger euro after
Spain secured help for its debt-stricken banks and on
better-than-expected Chinese economic data, which boosted risk
appetite.
The yields on the benchmark three-year and 14-year
bonds each fell 8.5 basis points to 6.18 percent and
8.205 percent respectively.
“Citi comments on South Africa’s inclusion in the WGBI will
be positive for foreign flows and the inclusion makes the flows
more sticky,” said Renaissance BJM bond trader Alvin Chawasema.
“Yields have responded accordingly, gaining while the rand
builds on the positive start.”
Citigroup said 11 South African government bonds with an $83
billion market value were eligible for the WGBI. This would give
them a market weight of 0.41 percent in the index.
In April, traders said inclusion in the WGBI could
potentially bring $5-9 billion worth of inflows into South
Africa.
The news also cheered the rand, which hit a session high of
8.2501 to the greenback and was at 8.2725 by 0653 GMT, up 1.34
percent from Friday’s close at 8.3846.
(Reporting by Stella Mapenzauswa; Editing by Jon Herskovitz)
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