Upward movement persists for fourth consecutive week

• Weekly bill auction undersubscribed for third consecutive week
• Rupee closes mostly unchanged

By Wealth Trust Securities

The upward momentum in secondary market bond yields witnessed over the previous few weeks continued during the trading week ending 12 February as well. Continued selling interest driven by the outcome of the weekly Treasury bill auction along with uncertain market conditions were seen as the reasons behind the increase in yields. At the weekly auction, only an amount of Rs. 13.92 billion was accepted in total against its total offered amount of Rs. 40 billion.

Activity was witnessed across the yield curve as the liquid maturities of 2022’s (i.e. 01.10.22 and 15.12.22), 01.10.23, 2024’s (i.e. 15.09.24 and 01.12.24), 01.05.25, 2027’s (i.e. 15.08.27 and 01.10.27) and 15.05.30 saw its yields edge up to intraweek highs of 5.57%, 5.55%, 5.95%, 6.62%, 6.67%, 6.90%, 7.31%, 7.35% and 8.02% respectively against its previous weeks closing levels of 5.40/45, 5.42/48, 5.90/97, 6.38/45, 6.45/50, 6.60/70, 7.15/20, 7.15/25 and 7.70/85, reflecting an upward shift of the yield curve week on week. 

In addition, maturities of 01.05.21, 01.08.21, 15.03.22, 15.01.23, 01.09.23, 15.12.23 and 01.01.24 traded at levels of 4.67%, 4.80%, 5.30% to 5.35%, 5.53% to 5.55%, 5.95%, 6.05% to 6.10% and 6.20% to 6.35% respectively as well. In the secondary bill market, March, July, September and October 2021 maturities changed hands at levels of 4.60% to 4.63%, 4.75%, 4.87% and 4.95% respectively.

The foreign holding in LKR bonds remained mostly unchanged at Rs. 7.42 billion.

The daily secondary market Treasury bond/bill transacted volumes for the first four trading days of the week averaged Rs. 5.78 billion. 

In money markets, the weighted average rates on overnight call money and repo remained mostly unchanged to average 4.55% each for the week as the total outstanding market liquidity was registered at Rs. 154.92 billion. The CBSL’s holding of Gov. Security’s increased further to Rs. 769.85 billion.

Rupee closes mostly unchanged

In the Forex market, USD/LKR rate on spot contracts was seen trading within a range of Rs. 194.30 to Rs. 195.00 during the week before closing the week at Rs. 194.00/195.00 against its previous week’s closing level of Rs. 193.50/194.50. 

The daily USD/LKR average traded volume for the first four days of the week stood at $ 53.32 million. 

(References: Central Bank of Sri Lanka, Bloomberg E-Bond trading platform, Money broking companies)