South African bonds were slightly firmer on Friday morning, while the rand was steady. Bonds made gradual gains as the rand returned to levels seen shortly before last month’s medium-term budget policy statement. In the days leading up to the medium-term budget, the yield on the benchmark R186 government bond was around 8.8% but weakened afterwards, as the speech disappointed. Prospects of SA’s credit rating being downgraded and increased political risk saw the yield on the R186 bond weakening to 9.47%, a level last seen in May last year. On Wednesday the rand gained 1.6% to the dollar as negative political news subsided and as the dollar weakened against most emerging-market currencies. TreasuryOne dealer Andre Botha said he expected the rand to trade within tight ranges on Friday and investors would be watching to see whether sentiment for the emerging-market rally could be sustained, which would open up SA for gains leading into next week and the credit-rating decision. At 9.05am...
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