Investors showed up for the yields, with 14.7 billion rand in offers ($906 million) for South African government bonds, central bank data show. The pile of offers amounted to close to six times the 2.55 billion rand Treasury actually allotted. For context, Bloomberg's math puts last week's auction at a 3.2 bid-to-cover against a year-to-date average of four. Buying picked up before Wednesday's inflation release and before the central bank's policy gathering scheduled for later in the week, as investors locked in comparatively high yields while they were available.
On offer from the National Treasury were fixed-coupon bonds coming due in 2038, 2039, and 2042. The 2038s were the standout, attracting demand equal to 6.7 times the amount on offer. The 2042s followed with a 5.7 bid-to-cover, while the 2039s saw 4.9 - still strong, just the lowest of the trio.
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South African yields have climbed alongside global rates during the recent selloff. The 10-year pushed above 9% last week - a level last seen in May - as higher oil prices stoked inflation worries. A Bloomberg survey's median view is that July consumer inflation likely ticked up to 4.5%, with data due Wednesday. Markets have largely baked in a rate increase, and that backdrop appears to bolster investors' confidence that the central bank can guide inflation toward its 3% objective.
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