Activity in secondary bond markets dry up ahead of weekly T bill auction
Wednesday, 25 June 2014 00:00
By Wealth Trust Securities
Activity in secondary bond markets dried up with two way quotes mainly seen on the 1 July 2019 and the two liquid 2018 maturities (i.e. 1 April 2018 and 15 August 2018) at levels of 8.72/74, 8.24/26 and 8.33/37 respectively. On the shorter end of the yield curve, the 15 July 2015 maturity was quoted between 7.02/05, and 15 may 2017 at 7.64/66 while on the longer end of the yield curve, the 1 July 2022 maturity was quoted at levels of 9.77/80.
This week’s Treasury bill auction will have on offer an increased amount Rs. 12 billion which will consist of Rs. 1 billion each on the 91-day and 182-day maturities and Rs. 10 billion on the market favourite 364-day maturity. At last week’ auction the weighted averages continued to decline with the 91-day and 182-day maturities reflecting dips of 1 basis point each to 6.53% and 6.71%.
However the weighted average on the 364-day maturity remained unchanged at 7.00%.
Meanwhile in secondary bill markets, the August 2014 maturities were quoted within a range of 6.54% to 6.58%, October 2014 within 6.60% to 6.65%, January 2015 within 6.70% to 6.77% and bills with maturities closer to 364-days within a range of 6.94% to 6.99%, amidst a fair amount of demand.
In money markets, the Open Market Operations (OMO) department of the Central Bank was seen mopping up Rs. 3.8 billion on a three-day basis at a weighted average of 6.61% while a further Rs. 8.76 billion was deposited at its window rate of 6.50%. This in turn resulted in overnight call money and repo rates remaining steady to average 6.99% and 6.54%, despite the surplus liquidity decreasing marginally to Rs. 12.56 billion.
Rupee dips marginally
In USD/LKR markets, the rupee on spot contracts lost grounds marginally to lows of Rs. 130.32 in comparison with the previous day’s closing level of Rs. 130.28/30 backed by importer demand.
The total USD/LKR traded volumes on 23 June stood at $ 39.10 million.
Some of forward dollar rates that prevailed in the market were 1 Month: Rs. 130.79, 3 Months: Rs. 131.63 and 6 Months: Rs. 132.83.