Considerable demand for bonds at Primary auction

By Wealth Trust Securities

The two Treasury bond auctions conducted yesterday recorded impressive weighted average yields with the total offered amount of Rs. 50 billion being successfully subscribed. The three-year maturity of 15 December 2021 recorded a yield of 11.88% while the seven-year and eight-month maturity of 1 August 2026 recorded a yield of 12.23%.

Activity in the secondary bond market picked up marginally subsequent to the auction with yields decreasing. The auctioned maturities were seen dipping to lows 11.80% and 12.10% respectively while two-way quotes along the rest of the yield curve also reduced and narrowed.  

The total secondary market Treasury bond/bill transacted volumes for 12 December was Rs. 6.57 billion. 

In money markets, the net liquidity shortfall in the system stood at Rs. 94.42 billion yesterday with the OMO Department of the Central Bank infusing liquidity by way of an overnight and a seven-day term reverse repo auction for successful amounts of Rs. 20.00 billion each at weighted average yields of 8.76% and 8.77%. The overnight call money rate averaged at 8.93%.

Rupee continues to depreciate 

In the Forex market, the USD/LKR rate on spot contracts depreciated further yesterday to close the day at Rs. 179.70/80 against its previous day’s closing levels of Rs. 179.50/65 on the back of continues demand.  The total USD/LKR traded volume for 12 December was $ 90.06 million. Some of the forward USD/LKR rates that prevailed in the market were 1 Month - 180.70/00; 3 Months - 182.75/15 and 6 Months - 185.75/15.