Activity dries up in secondary bond markets

Friday, 7 February 2014 01:14 - - {{hitsCtrl.values.hits}}

By Wealth Trust Securities Activity in secondary bond markets dried up yesterday as yields remained steady, mainly due to a wait-and-see policy adopted by most market participants in line with the outcome of yesterday’s Treasury bill auction and foreign selling on rupee bonds over the past few days. Active two-way quotes were mainly seen on the liquid two 2018 maturities (i.e. 1 April 2018 and 15 August 2018) at levels of 9.27/30 and 9.30/35 while a limited amount of activity was witnessed on the two year maturity of 1 April 2016 within the range of 7.85% to 8.00%.

However, demand for Treasury bills continued in secondary bill markets with August 2014 maturities changing hands within the range of 6.75% to 6.80%, October 2014 within 6.85% to 6.90% and January 2014 within 7.00% to 7.05%. In money markets, overnight call money and repo rates remained steady to average 6.67% and 6.08% respectively despite liquidity decreasing to Rs. 28.33 billion yesterday. The Open Market Operations (OMO) department of Central Bank was seen continuing to mop up liquidity by way of an overnight repo auction and three term repo auctions as well. The overnight auction fetched a weighted average (WAvg) of 6.50% with an amount of Rs. 18 b being mopped up while a total amount of Rs. 16.60 b was drained on the term auctions for periods ranging from 14 days to 63 days and WAvgs of 6.54% to 6.76%. Rupee remains steady The USD/LKR rate remained steady for a third consecutive day to close the day at levels of Rs. 130.65/67 as markets stood at equilibrium. The total USD/LKR traded volume for the previous day (5 February 2014) stood at US$ 72.17 million. Some of the forward dollar rates that prevailed in the market were : one month – 131.02; three months – 131.91; six months – 133.18.