364-day bill WAvg steady for a fourth consecutive week
Tuesday, 13 May 2014 00:01
Secondary market bond yields continue declining trend; 4-year yield at 32-month low
By Wealth Trust Securities
The weekly Treasury bill auction conducted yesterday witnessed mixed signals as the weighted average on the 91-day bill which was offered after a lapse of two weeks dipped by one basis point (bp) to 6.57% while WAvgs on the 182 day and 364 day maturities remained unchanged at 6.76% and 7.02% respectively with the latter maturity holding its yield for a fourth consecutive week against market expectations.
The market favourite 364 day bill continued to dominate the auction as it represented 80% of the total accepted amount, which was Rs. 4.2 billion higher than its initial offered amount of Rs. 12 billion.
Meanwhile, the decreasing trend in secondary market bond yields witnessed over the previous week continued into the start of this week as well with yields dipping during morning hours of trading. Yields on the liquid four-year maturity of 1 April 2018 was seen hitting a 32 month low of 8.43% while the five-year maturity of 1 July 2019 was seen dipping to a two month low of 8.93%.
However, yields increased marginally once again towards the latter part of the day following the outcome of the weekly auction to close the day at levels of 8.44/47, 8.53/55 and 8.94/97 respectively. In addition yields on the 2016 and 2015 maturities were seen dipping as well to change hands within the range of 7.58% to 7.63% and 7.14% to 7.22% respectively.
Meanwhile in secondary bill markets, August 2014 maturities were seen changing hands within the range of 6.58% to 6.61%, October 2014 within 6.68% to 6.73%, February 2014 within 6.85% to 6.90% while the latest 364-day bill was seen quoted within the range of 6.96% to 7.02%, reflecting continued demand.
In money markets, overnight call money and repo rates remained steady to average 6.95% and 6.51% respectively as surplus liquidity in the market stood at Rs. 11.57 billion yesterday. The Open Market Operations (OMO) department of Central Bank was seen mopping up an amount of Rs. 5.5 b on a four-day basis at a WAvg of 6.60% while a further amount of Rs. 6.07 b was deposited at CBSL’s Standing Deposit Facility Rate (SDFR) of 6.50%.