Bonds rally for third consecutive day ahead of weekly bill auction

By Wealth Trust Securities

The secondary market bond yields continued its downward spiral for a third consecutive trading day as activity remained high.

The yields on the two 2022 maturities (i.e. 01.07.22 and 01.10.22) dipped to intraday day lows of 9.12% and 9.16% respectively against its previous day’s closing levels of 9.15/25 and 9.20/25, while the yields of the 2023 maturities (i.e. 15.07.23 and 15.12.23) decreased to 9.62% and 9.70% respectively as against 9.63/70 and 9.72/74.  

The most liquid 2024 maturities (i.e.15.03.24, 15.06.24 and 15.09.24) saw its yields reduce to lows of 10.00% each as against 10.00/04, 10.00/05 and 10.05/10 recorded the previous day. In addition, the maturities of 01.05.20, 01.03.21 and 01.05.21 changed hands at levels of 7.87%, 8.56% to 8.57% and 8.65% respectively while the 15.10.25, 15.06.27 and 15.09.34 maturities traded at levels of 10.06% to 10.11%, 10.32% and 10.68% to 10.69% respectively as well.

At today’s auction, a total amount of Rs.22 billion will be on offer consisting of Rs.12.5 billion of the 364 day maturity, Rs.6.5 billion of the 182 day maturity and Rs.3.0 billion of the 91 day maturity. 

At last week’s auction, the weighted average yields of the 364 day and 182 day bills remained steady at 8.41% and 7.73% respectively while the weighted average yield of the 91 day decreased by 02 basis points to 7.58%. In the secondary bill market, July, September and October 2020 maturities traded at levels of 8.25%, 8.16% to 8.20% and 8.36% respectively. 

The total secondary market Treasury bond/bill transacted volume for 14 October was Rs.13.83 billion. 

Meanwhile in money markets, the overnight call money and repo rates averaged 7.50% and 7.55% respectively as the Open Market Operations (OMO) Department of Central Bank injected an amount of Rs.10 billion by way of an overnight Reverse repo auction at a weighted average rate of 7.59%. The overnight net liquidity surplus in the system stood at Rs.4 billion yesterday.

Rupee dips to Rs.182

 In Forex market, the USD/LKR rate on its spot contracts were seen depreciating considerably yesterday to hit low Rs. 182 against its previous day’s closing levels of 180.95/10 on the back of continued buying interest by banks. Nevertheless, it was seen bouncing back marginally from its day’s low to close the day at Rs.181.85.

The total USD/LKR traded volume for 15 October was $ 67.65 million.

Given are some forward USD/LKR rates that prevailed in the market: one month – 182.45/65; three months – 183.60/90; six months – 185.20/60.