Bond yields increase ahead of weekly Treasury bill auction

Tuesday, 18 February 2020 00:00 - - {{hitsCtrl.values.hits}}

By Wealth Trust Securities

The fresh trading week saw secondary market bond yields increasing further yesterday on the back of limited trades as overall activity remained rather dull.

The maturities of 01.08.21, 01.10.22, 01.09.23 and 2024s (i.e. 15.06.24, 01.08.24 and 15.09.24) were seen hitting intraday highs of 9.00%, 9.28%, 9.48%, 9.65%, 9.75% and 9.67% respectively against its previous day’s closing levels of 8.70/90, 9.00/15, 9.25/40, 9.58/62 each and 9.60/70.

Today’s weekly Treasury bill auction will have on offer an amount of Rs. 25 billion consisting of Rs. 8 billion on the 91day maturity, Rs. 5 billion on the 182 day maturity and Rs. 12 billion on the 364 day maturity. At last week’s auction, weighted average yields increased by five and 13 basis points on the 182 day and 364 day maturities respectively to 8.04% and 8.55% while the weighted average yield on the 91 day maturity decreased by one basis point to 7.36%.

The total secondary market Treasury bond/bill transacted volume for 14 February 2020 was Rs. 13.99 billion.

In money markets, the weighted average yields on overnight call money and repo rates stood at 6.99% and 7.02% respectively as the Domestic Operations Department (DOD) of the Central Bank of Sri Lanka injected an amount of Rs. 15 billion on an overnight basis by way of Reverse Repo auction at a weighted average rate of 6.97%. It further injected an amount of Rs. 2.5 billion for Standalone Primary Dealers by way of an overnight reverse repo auction at a weighted average rate of 7.11% while an amount of Rs. 15 billion was also injected for 14 days at a weighted average rate of 7.07%, value today.

The overnight net liquidity surplus in the system stood at Rs. 0.52 billion yesterday.

Rupee loses marginally

In the Forex market, the USD/LKR rate on spot contracts were seen losing marginally yesterday to close the day at Rs. 181.50/60 against its previous day’s closing level of Rs. 181.45/52.

The total USD/LKR traded volume for 14 February was $ 55.84 million.

Some of the forward USD/LKR rates that prevailed in the market were one month - 182.00/15; three months - 183.00/20 and six months - 184.60/90.

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