Bond market inactive despite steady outcome at auctions

Tuesday, 31 October 2017 00:00 - - {{hitsCtrl.values.hits}}

By Wealth Trust Securities

The Central Bank of Sri Lanka was seen raising a total amount of Rs. 25 billion through two Treasury bond auctions yesterday.

The 2.6-year maturity of 01.05.2020 and the 7.11 year maturity of 15.10.2025 were seen recording weighted averages of 9.92% and 10.33% respectively.

However, activity in the secondary bond market continued to remain dull yesterday with a limited amount of trades witnessed on the maturities of 01.07.19, 15.09.19 and 01.05.20 at levels of 9.70%, 9.75% and 9.85% respectively.

This was ahead of today’s weekly Treasury bill auction, where a total amount of Rs. 20.5 billion will be on offer consisting of Rs. 7 billion of the 91 day maturity, Rs. 6 billion of the 182 day maturity and Rs. 7.5 billion of the 364 day maturity.

At last week’s auction, the weighted average of the 364 day maturity increased by five basis points to 9.51% and the weighted average of the 91 day maturity decreased by three basis points to 8.76% while the weighted average of the 182 day maturity remained unchanged at 9.12%.

Furthermore, inflation numbers for October will be due today. Inflation for September was seen increasing on both its point-to-point and annual average to 7.1% and 5.8% respectively.

The total secondary market Treasury bond/bill transacted volumes for 27 October 2017 was Rs. 7.19 billion.

In money markets, the OMO department of the Central Bank was seen draining out an amount Rs. 1.42 billion by way of an outright sale of Treasury bills at a weighted average rate of 8.49% for 59 days. The overnight call money and repo rates remained mostly unchanged to average 8.14% and 7.62% respectively as the Open Market Operations (OMO) department of the Central Bank drained out a further amount of Rs. 15 billion on an overnight basis by way of a Repo auction at a weighted average rate of 7.25%. The net surplus liquidity in the system increased to Rs. 20.59 billion.

Rupee depreciates marginally

In Forex markets yesterday, the USD/LKR rate on spot contracts depreciated once again to close the day at Rs. 153.55/60 against its previous day’s closing levels of 153.45/55 on the back of renewed importer demand.

The total USD/LKR traded volume for 27 October 2017 was $ 63.75 million.

Some of the forward USD/LKR rates that prevailed in the market were one month - 154.45/55; three months - 156.15/25 and six months - 158.55/70.