Demand for three and 15 year bonds evident at second bond auction for the year

By Wealth Trust Securities

Continuing with the recent trend, Central Bank was able accept more than the initial offered amount at its second Treasury bond auction for the year conducted yesterday. A total amount of Rs. 9.6 billion was accepted on all three maturities, surpassing the initial total offered amount of Rs. 9 billion.

Interestingly the longer tenure maturity of 1 July 2028 (i.e. 15 year bond) succeed in accepting successful bids of Rs. 4.5 billion while keeping its weighted average (WAvg) unchanged at 12.25% while the other long tenure maturity of 1 May 2021 (i.e. eight years) also saw its WAvg remaining unchanged at 11.64%. However the shorter tenure three year to mature bond recorded a WAvg of 10.98% which was higher than the five year WAvg of 10.90% as an amount of Rs. 4 billion was accepted.

In secondary bond markets, yields increased across the yield curve mainly on the two five year maturities (i.e. 15.08.2018 and 01.04.2018) as volumes traded remained high. These two maturities opened the day at levels of 11.00/05 and 11.05/10 respectively and increased by around 10 basis points each to close the day at levels of 11.14/18 and 11.15/20 respectively. However continued demand for secondary market Treasury bills remained with the 364 day bill changing hands at levels of 11.15% to 11.18%.

Meanwhile in money markets, overnight call money and repo rates remained steady to average 9.66% and 8.83% respectively as an amount of Rs. 40 billion was mopped up on an overnight basis by way of a Repo auction conducted by the Open Markets Operations (OMO) Department of Central Bank at a WAvg of 8.50% yesterday.

A further amount of Rs. 6 billion was drained by way of a term repo auction of 10 days at a WAvg of 8.55%. Overall surplus liquidity increased to Rs. 47.2 billion yesterday with a further Rs. 7.2 billion been deposited at CBSL’s repo window of 7.50%.

Rupee closes the day steady

The dollar rupee rate remained mostly unchanged within the range of Rs. 126.60-Rs. 126.70 yesterday as volume traded moderated. The total USD/LKR traded volume for the previous day (18-01-13) stood at US$ 31.23 million. Some of the forward dollar rates that prevailed in the market: one month – 127.74, three months – 129.46 and six months – 132.13.