Robust outcome at Bond auctions

• Bond yields continue to free fall

By Wealth Trust Securities

The two Treasury bond auctions conducted yesterday were seen recording impressive weighted averages. The 2 year and 6 month maturity of 01.08.2021 recorded a weighted average of 10.85% while the new 7 year and 11 month maturity of 15.01.27 recorded a weighted average of 11.30%.

The yields in the secondary bond market continued its decreasing trend yesterday, across the yield curve once again. The liquid maturities of 15.12.23, 15.03.25 and 01.08.26 were seen dipping to intraday lows of 10.95%, 11.15% and 11.13% respectively against its previous day’s closing levels of 11.06/10, 11.20/28 and 11.25/28 while the auction maturities of 01.08.21 and 15.01.27 were seen changing hands within the range of 10.72% to 10.85% and 11.20% to 11.25% respectively. In addition the maturities of the two 2021’s (i.e. 01.03.21 and 15.12.21) and 01.09.28 changed hands at levels of 10.65%, 10.80% to 10.85% and 11.35% respectively as well. Meanwhile in the secondary bill market, the latest 364 day bill changed hands within the range of 10.60% to 10.65%.

Inflation for the month of January was seen increasing to 3.7% on the basis of its point to point against its previous month of 2.8% while its annualised average dipped to 4.1% against its previous month of 4.3%.

The total secondary market Treasury bond/bill transacted volumes for 30 January was Rs. 17.21 billion. In the money market, the overnight call money and repo rates averaged at 9.00% and 8.99% respectively as the net liquidity shortfall in the system reduced further to Rs. 102.46 billion yesterday. The OMO Department of the Central Bank of Sri Lanka injected an amount of Rs. 40.00 billion at a weighted average of 9.00%, by way of an overnight reverse repo auction.

Rupee appreciates further  

The USD/LKR rate on spot contracts was seen appreciating further yesterday to close the day at Rs. 178.35/55 against its previous day’s closing levels of Rs. 179.25/50 on the back of continued selling interest by Banks.

The total USD/LKR traded volume for 30 January was $ 133.81 million.

Some of the forward USD/LKR rates that prevailed in the market were 1 month - 179.20/40; 3 months - 181.10/40 and 6 months - 184.10/40.