Bond market sentiment remains negative

By Wealth Trust Securities

The upward momentum in the yields of the primary and secondary bill and bond market continued for a second consecutive week, reflecting a parallel shift upwards of the overall yield curve.

The outcome at the weekly Treasury Bill auction saw the weighted averages increasing for a second consecutive week with the accepted amount dipping close to a 12 year low of Rs. 1.01 b.  

In secondary bond markets, activity was seen increasing during the week with the liquid maturities of 01.05.20, 01.10.22, 01.09.23, 01.08.24 and 01.08.26 hitting weekly highs of 12.20%, 12.50%, 12.86% and 12.88% each respectively against its previous weeks closing levels of 11.80/00, 11.95/10, 12.05/15, 12.05/20 and 12.10/30. Furthermore selling interest of the 2018 and 2030 maturities saw it change hands within the range of 11.35% to 11.50% and 12.70% to 12.80% respectively. 

Meanwhile, the foreign holding in Rupee bonds was seen reducing by Rs. 2.9 b during the week ending 16 November, recording its fifth consecutive week of out flows.

In money markets, the overnight call money and repo rates remained mostly unchanged to average at 8.44% and 8.64% respectively for the week as the Open Market Operations (OMO) Department of the Central Bank of Sri Lanka continued to infuse liquidity by way of overnight reverse repo auctions at a weighted average of 8.49%. The net liquidity shortfall for the week stood at Rs.48.73 b. 

Rupee depreciates during the week

 The rupee on active one week forwards as well as spot next contracts depreciated further during the week to close the week at Rs. 148.90/00 and Rs. 148.70/80 against its previous weeks closing of Rs. 148.30/40 and Rs. 148.10/25 on the back of importer demand.

The daily USD/LKR average traded volume for the first three days of the week stood at $ 41.26 m.

Some of the forward dollar rates that prevailed in the market were one month - 149.60/70; three months - 151.45/55 and six months - 154.00/20.