5-year bond yield hits 11% for first time in over a year

Friday, 28 September 2018 00:00 - - {{hitsCtrl.values.hits}}

By Wealth Trust Securities

The upward trend in secondary market bond yields continued yesterday as the five-year bond yield at the belly end of the curve was seen hitting a psychological level of 11% for the first time since July 2017. Local selling interest mainly on the 15.07.23 and 01.08.24 maturities saw its yields hit intraday highs of 11% each against its previous day’s closing levels of 10.70/80 and 10.80/90. In addition, the maturities of 15.10.25, 01.08.26, 15.06.27 and 01.09.28 were seen changing hands at levels of 11% to 11.02%, 10.97%, 11.05%, and 11.03% to 11.10% as well. The total secondary market Treasury bond/bill transacted volumes for 26 September was Rs. 15.78 billion.

In money markets, the Open Market Operations (OMO) Department of the Central Bank continued to inject liquidity by way of overnight and term basis as the net liquidity shortfall remained at a high of Rs. 49.68 billion yesterday. An amount of Rs. 43.90 billion and Rs. 4 billion was injected on an overnight basis and 14 days, respectively, at weighted averages of 8.18% and 8.30%. The overnight call money and repo rates averaged 8.36% and 8.23%, respectively.

Rupee dips

The USD/LKR rate on spot contracts was seen depreciating to close the day at Rs. 169.25/35 against its previous day’s closing of Rs. 168.95/15 on the back of continued importer demand.

The total USD/LKR traded volume for 26 September was $ 124.30 million.

Some forward USD/LKR rates that prevailed in the market are 1 month – 170.30/60, 3 months – 172.10/40, and 6 months – 174.70/20