Bond yields continue to decline

By Wealth Trust Securities

The secondary bond market remained active yesterday as yields continued to decrease on the back of buying interest amidst continued foreign selling. Yields on the liquid maturities of 15.09.19, 01.05.20, three 2021’s (i.e. 01.03.21, 15.10.21 and 15.12.21) and three 2023’s (i.e. 15.03.23, 15.05.23 and 15.07.23) dipped to intraday lows of 10.50%, 10.75%, 10.90%, 10.95% each, 11.25%, 11.30% and 11.28%, respectively, against its previous day’s closing levels of 10.65/75, 10.90/00, 11.00/15, 11.10/30, 11.15/30, 11.30/38, 11.35/45 and 11.30/40. However, profit taking at these levels curtailed the downward movement any further for the day. 

In addition, yields on the 01.07.22 and 15.06.27 maturities were seen declining to lows of 11.25% and 11.40% as well. Meanwhile, in secondary market bills, durations centring October were seen trading at level of 10.45% to 10.50%.

The total secondary market Treasury bond/bill transacted volume for 31 October was Rs. 6.15 billion.  

In the money market, the overnight call money rate remained mostly unchanged to average 8.45% as the OMO Department of Central Bank was seen infusing liquidity by way of an overnight and a seven-day term repo auction for successful amounts of Rs. 19.95 billion and Rs. 22.30 billion respectively at weighted averages of 8.47% and 8.50%. In addition, an amount of Rs. 2 billion was injected for 14 days at a weighted average rate of 8.48%, valued today as the net liquidity shortage in the system increased to Rs. 54.02 billion yesterday.

Rupee appreciates

The rupee rate on spot contracts was seen appreciating for the first time since 12 October to close the day at Rs.174.00/40 against its previous day’s closing level of Rs.175.60/80 on the back of selling interest by banks.

The total USD/LKR traded volume for 31 October was $ 57.70 million.

Some of the forward USD/LKR rates that prevailed in the market were 1 month – 175.00/50, 3 months – 177.00/50, and 6 months – 179.90/50.