Bond market opens the year on bullish note

Wednesday, 3 January 2018 00:00 - - {{hitsCtrl.values.hits}}

By Wealth Trust Securities

The first trading day for the New Year saw secondary market bond yields decreasing mainly on the liquid maturities of the two 2026’s (i.e. 01.06.26 and 01.8.26) and 15.06.27 from its opening highs of 10.05% each and 10.10% respectively to lows of 10.00% each.

In addition, activity was witnessed on the 2019, 2020 and 2021 maturities at 9.00% to 9.10%, 9.20% to 9.35% and 9.40% to 9.58% as well. In the secondary bill market, April, July, September and November maturities were traded at levels of 7.75%, 8.45%, 8.60% to 8.65% and 8.70% to 8.75% respectively.

At today’s auction, a total amount of Rs. 23.5 billion will be on offer which will consist of Rs. 8 billion on the 182 day maturity and Rs. 15.5 billion on the 364 day maturity. At last week’s auction, the weighted average on the 182 day and 364 day bills declined by 10 and two basis points respectively to 8.30% and 8.90% respectively while the 91 day bill was not on offer.

The total secondary market Treasury bond/bill transacted volumes for 29 December 2017 was Rs.6.16 billion.

In money markets, the Central Bank’s Open Market Operations (OMO) Department was seen mopping up excess liquidity by way of a term repo auction. The auction drained out an amount of Rs. 16 billion at weighted averages of 7.31% for seven days. Further, an amount of Rs. 14.31 billion was mopped up on overnight basis at a weighted average of 7.25% as the net surplus liquidity increased to Rs. 37.02 billion yesterday. The overnight call money and repo rates averaged 8.16% and 7.54% respectively.

Rupee loses further

The USD/LKR rate on spot contracts was seen depreciating further yesterday to close the day at Rs. 153.70/80 against its previous day’s closing levels of Rs. 153.50/60 on the back of importer demand.

The total USD/LKR traded volume for 29 December 2017 was $ 81.10 million.

Some of the forward USD/LKR rates that prevailed in the market were one month - 154.70/85; three months - 156.40/55 and six months - 159.00/15.