Bond market activity picks up as yields edge up ahead of weekly auction

Wednesday, 5 September 2018 00:00 - - {{hitsCtrl.values.hits}}

Liquidity drops to one-and-half-month low

By Wealth Trust Securities

Activity in the secondary bond market picked up yesterday as yields were seen increasing marginally on the back of local and foreign selling interest.

The yields of the maturities 2021’s (i.e. 01.03.21, 01.05.21, 01.08.21, 15.10.21 and 15.12.21), 01.10.22, 15.07.23 and 01.08.24 were seen increasing to intraday highs of 9.50% each, 9.56%, 9.60%, 9.65%, 9.85%, 9.95% and 10.15% respectively against its previous day’s 9.47/50, 9.48/52, 9.52/58, 9.58/63, 9.60/65, 9.80/84, 9.90/93 and 10.00/02. Furthermore, a limited amount of activity was witnessed on the 2019’s (i.e. 15.01.19, 01.07.19 and 15.09.19) and 01.06.26 at levels of 8.52%, 8.97% to 8.98%, 9.00% and 10.12%.

At today’s weekly bill auction, a total amount of Rs. 11 billion will be on offer consisting of Rs. 4 billion on the 91 day and Rs. 7 billion of the 364 day maturities. At last week’s auction, the weighted average yields on the 91 day and 364 day maturities decreased by six and one basis points respectively to 8.03% and 8.99%. The 182 day bill was not on offer.

The total secondary market Treasury bond/bill transacted volumes for 3 September 2018 was Rs. 1.00 billion.

The net surplus in the money market was seen dipping to a one-and-a-half-month low of Rs. 4.98 billion yesterday as the Open Market Operations (OMO) Department of Central Bank refrained from conducting any auctions. The overnight call money and repo rates averaged 7.89% and 8.00% respectively.

Rupee depreciates

to new low

The USD/LKR rate on spot contracts was seen depreciating further yesterday to close the day at a new low of Rs. 161.95/00 against its previous day’s closing of Rs. 161.65/70 on the back of continued importer demand and foreign selling in rupee bonds.

The total USD/LKR traded volume for 3 September was $ 74.27 million.

Some of the forward USD/LKR rates that prevailed in the market were one month - 162.75/95; three months - 164.25/55 and six months - 166.70/00.