Secondary market bond yields decline

Friday, 28 February 2020 00:00 - - {{hitsCtrl.values.hits}}

By Wealth Trust Securities

The secondary bond market witnessed buying interest across the yield curve which led to yields decreasing yesterday.

The liquid maturities of 2023’s (i.e. 15.03.23, 15.05.23, 15.07.23 & 01.09.23), 2024’ (i.e. 01.01.24, 15.06.24, 01.08.24 & 15.09.24), 15.10.27 and 01.09.28 saw its yields hit intraday lows of 9.25%, 9.36%, 9.30% each, 9.60% each, 9.65%, 9.62%, 9.80% and 9.90% respectively against its previous day’s closing levels of 9.40/48, 9.40/50 each, 9.68/75, 9.70/75, 9.75/80, 9.70/75, 9.85/00 and 9.90/10. Furthermore, trades were also witnessed on the maturities of 01.05.20, 01.05.21, 15.03.24 and 15.06.27 at levels of 7.30%, 8.60%, 9.65% to 9.69% and 9.85% to 9.93% respectively. In the secondary bill market, bills with maturities of March 2020, May 2020, October 2020, November 2020, January 2021 and February 2021 traded at levels of 7.21% to 7.35%, 7.30% to 7.40%, 8.00%, 8.43%, 8.47% and 8.45% to 8.50% respectively.

The total secondary market Treasury bond/bill transacted volume for 26 February was Rs. 22.60 billion.

In money markets, the overnight net liquidity surplus in the system was seen increasing to over a nine month high of Rs. 66.18 billion yesterday. This led to the Domestic Operations Department (DOD) of the Central Bank of Sri Lanka draining out an amount of Rs. 20.00 billion at a weighted average of 6.96% by way of an overnight repo auction while a further Rs. 19.00 billion was drained out by way of a seven day repo auction at a weighted average yield of 7.04%. Overnight call money and repo recorded weighted average yields of 6.95% and 6.99% respectively.

Rupee loses

In the Forex market, the USD/LKR rate on spot contracts were seen losing yesterday to close the day at Rs. 181.85/90 in comparison to its previous day’s closing level of Rs. 181.65/70 on the back of buying interest by Banks.

The total USD/LKR traded volume for 26 February was $ 59.00 million.

Some of the forward USD/LKR rates that prevailed in the market were one month - 182.40/55; three months - 183.45/65 and six months - 184.90/20.

Correction

The report on 26 February states overnight liquidity incorrectly as Rs. 34.56 billion which should correctly read as Rs. 58.56 billion.