WEDNESDAY, 11.30AM
FINANCIAL markets were bullish on Tuesday, boosted by news of record gold and forex reserves, government’s successful Samurai bond launch and lower money market rates.
The Reserve Bank’s strong reserves in April pushed long bond rates through key resistance levels and boosted share prices on the Johannesburg Stock Exchange. The buoyant mood in the markets was coupled with expectations of a third-quarter interest rate cut as money market conditions loosened up.
Meanwhile, government on Tuesday scored a resounding success with its latest Samurai bond offer, which attracted a much improved price over SA’s first yen bond in 1995. The finance department said the seven-year Samurai bond issue was priced 70 basis points above the London Interbank Offered Rate, and 93 points above the equivalent Japanese government bond.
On the local bond market, the key R150 government long bond shed around 20 points to a best yield of 14,66% on Tuesday, before closing the day at 14,70%. Call rates on cash deposits have dropped to 15,25% from 16,25% a month ago, and three-month negotiable certificates of deposits fell 20 points over the month. Meanwhile, the money market shortfall on Monday fell to R5,788-billion, its lowest level in 11 months, from Saturday’s R6,622-billion.