Secondary bond market activity picks up as yields dip on rating upgrade

By Wealth Trust Securities

Activity in the secondary bond market picked up yesterday as Sri Lanka’s rating outlook was upgraded to stable from negative by Standard and Poor’s. 

The yields of the two liquid 2021 maturities  (i.e. 01.03.2021 and 15.12.2021), the 01.09.23 and 01.08.26 were seen dipping to intraday lows of 9.98%, 10.02%, 10.15% and 10.23% respectively against its previous day’s closing levels of 10.07/10, 10.10/15, 10.15/30 and 10.30/35. 

Furthermore, a limited amount of activity was witnessed on the 01.05.20 and 01.09.28 maturities at levels of 9.84% to 9.86% and 10.50% respectively.

At today’s Treasury bill primary auction, a total amount of Rs. 21 billion will be on offer consisting of Rs. 4 billion of the 91 day, Rs.7 billion of the 182 day and Rs. 10 billion of the 364 day maturities. At last week’s auction, the weighted average yields reflected mix results with the 91 day and 182 day maturities decreasing by 13 and 9 basis points to 8.54% and 8.93% and the yield of the 364-day maturity increasing by two basis points to 9.46%. 

The total secondary market Treasury bond/bill transacted volumes for 20 November 2017 was Rs.0.2 billion.

Meanwhile, in money markets, overnight call money and repo rates remained mostly unchanged to average 8.13% and 7.59% respectively with the net surplus liquidity at Rs. 28.46 billion. The Open Market Operations (OMO) Department of the Central Bank of Sri Lanka was seen draining out an amount of Rs. 10.75 billion on an overnight basis at a weighted average of 7.25% while an additional Rs. 17.87 billion was deposited at its Standing Deposit Facility Rate (SDFR) of 7.25%.

Rupee remains mostly unchanged

Meanwhile, in the Forex market, the USD/LKR rate on spot contracts remained mostly unchanged to close at Rs. 153.75/82.

The total USD/LKR traded volume for the 20 November 2017 was $ 125.85 million.

Some of the forward USD/LKR rates that prevailed in the market were one month - 154.55/65; three months - 156.45/55 and six months - 159.05/15.