The three-year bond yield dropped to a record 6.05 percent while the yield on the 14-year issue hit an eight-month low of 8.02 percent.

"The whole market has got a little bit excited. This has all been foreign-driven. We've seen gigantic foreign inflows over the last two weeks or so and its driven all bond yields down," said Malcolm Charles, a fixed income portfolio manager at Investec.

Offshore accounts picked up 3.1 billion rand ($377 million) of local debt last week. Year-to-date, foreigners have bought 11 billion rand more in 2012 than they did in the same period last year.

"They obviously think the world is a perfect place to be investing in risk assets again," Charles said.

Earlier in the session, the Treasury sold 2.1 billion rand in 2017, 2021 and 2023 paper at lower yields than at their previous sales.

The new 2023 issue cleared at 7.77 percent and attracted the most interest, with a 4.18 times bid-to-cover ratio.

Bond investors are waiting for May inflation data on Wednesday to give clues on the likelihood of monetary easing by the central bank next month. Economists' expectations are for CPI to ease back into the bank's 3-6 percent target band.

The rand strengthened more than one percent against the dollar, piercing through the 8.20/22 resistance area as commodity currencies gained.

Dealers are watching to see if the breach will be sustained before looking for stronger target levels.

"Stops were triggered through 8.21/22. From a technical perspective if the rand closes below that area now, it's open to 8.05. Technically that's where it can go," one local dealer said.

The dollar was sold in the late afternoon session amid expectations of a third round of quantitative easing from the US Federal Reserve, which would boost the rand as the extra liquidity finds its way into high-yielding emerging markets.