Phase III of T. Bond auction system unlocked for the first time 

• Secondary market bond yields increase further
• Liquidity returns to money markets

 By Wealth Trust Securities

The mandatory phase III (Three) of the new Treasury bond auction system was accessed for the first time at its auctions held yesterday, since its introduction in July 2017.

The total offered amount of Rs. 30 billion on the three-year and one-month maturity of 15.10.2021 was unsuccessfully subscribed to at its phase I, leading to its phase II and eventual mandatory phase III. This maturity recorded a weighted average of 10.03%, above its pre-auction secondary market quote of 9.85/95. 

However, the total offered amount of Rs. 30 billion on the seven-year and one-month maturity of 15.10.2025 was fully subscribed at its phase I, recording a weighted average of 10.32%, lower than its pre-auction secondary market quote of 10.35/50.  

 Given below are the details of the auction.

 The secondary bond market remained active yesterday as yields on the maturities of the 15.10.21, two 2023s (i.e.15.03.23 and 15.07.23), two 2024s (i.e. 01.01.24 and 01.08.24) and 15.10.25 were seen increasing further to hit intraday highs of 10.10%, 10.20%, 10.27%, 10.35% each and 10.48% respectively. 

In addition, the maturities of 01.03.21 and 01.09.28 were seen changing hands at levels of 9.70% to 9.80% and 10.50% as well. In the secondary bill market, the 364-day bill was traded within the range of 9.15% to 9.20%.   The total secondary market Treasury bond/bill transacted volumes for 12 September 2018 was Rs. 6.59 billion.

Given below are the closing, secondary market yields of the most frequently traded T – bills and bonds. Liquidity was seen returning to the money market yesterday as the net position in the system turned positive to record a surplus of Rs. 16.30 billion against a deficit of Rs. 3.53 billion the previous day. Furthermore, the OMO Department of the Central Bank conducted its third successful 14-day term reverse repo auction, injecting an amount of Rs. 12.5 billion at a weighted average of 7.97%. Overnight call money and repo averaged 8.01% and 7.96% respectively. 

Rupee dips further

 Continued importer demand in the Forex market saw the USD/LKR rate on spot contacts losing further to close the day at Rs. 162.85/00 against its previous day’s closing of Rs. 162.40/60.

The total USD/LKR traded volume for 12 September 2018 was $ 100.25 million. Given below are some forward USD/LKR rates that prevailed in the market. 

 1 Month              -               163.70/00

3 Months             -              165.35/65

6 Months             -              167.85/15