Primary Bond auction fully subscribed as yields dip

By Wealth Trust Securities

The two Treasury bond auctions conducted yesterday, recorded impressive weighted average yields, with the total offered amount of Rs. 70 billion being fully subscribed. The two-year and four-month maturity of 15.10.2021 recorded a yield of 9.79% while the eight-year and nine-month maturity of 15.03.28 recorded a yield of 10.63%. 

Activity in the secondary bond market picked up marginally subsequent to the auction, with yields decreasing. The liquid maturities of 15.03.24 and 15.01.27 were seen dipping to lows of 10.30% and 10.60% against its opening highs of 10.35% and 10.70%. 

In addition, the two 2021’s (i.e. 01.08.21 & 15.12.21), two 2022’s (i.e. 15.03.22 & 01.10.22), 15.03.23, 15.10.25, 01.08.26 and 01.05.29 traded at levels of 9.70% to 9.80%, 10.00% to 10.03%, 10.20%, 10.55%, 10.55% and 10.70% to 10.73% respectively.

The total secondary market Treasury bond/bill transacted volumes for 12 June was Rs. 9.67 billion. 

In money markets, the overnight call money and repo rates averaged 7.87% and 8.01% respectively as the Open Market Operations (OMO) Department of the Central Bank drained out an total amount of Rs. 43.3 billion by way of an overnight and five day repo auction at weighted average yields of 7.80% and 8.05% respectively, and an amount of Rs. 10.5 billion, value today, by way of a 10-day repo auction at a weighted average rate of 8.16%. The net liquidity surplus in the system stood at Rs. 48.30 billion yesterday.  

Rupee dips further

In the Forex market, the USD/LKR rate on spot contracts depreciated further yesterday to close the day at levels of Rs. 176.60/70 against its previous day’s closing levels of Rs. 176.50/60 on the back of continued buying interest by banks.

The total USD/LKR traded volume for 12 June was $ 100.17 million.

Some of the forward USD/LKR rates that prevailed in the market were 1 month – 177.30/50; 3 months – 178.80/10 and 6 months – 181.00/30.