One year bill WAvg drops for the first time in six weeks

Thursday, 3 October 2013 00:00 -     - {{hitsCtrl.values.hits}}

By Wealth Trust Securities The weighted average (WAvg) on the benchmark 364-day bill decreased for the first time six weeks at its weekly Treasury bill auction conducted yesterday. The degree of the drop was 5 basis points (bp) to 10.52% while all bids for the 91-day and 182-day bills were rejected. Only an amount of Rs. 4.76 billion was accepted on the 364-day maturity against bids of Rs. 21.83 billion received to all but meet the total offered amount of Rs. 5 billion. Following the auction, the upward trend in secondary bond market yields witnessed the previous day reversed as well, with the liquid five year maturity (i.e. 1 April 2018) hitting an intraday and a one month low of 11.68% once again to close the day at 11.69/70 against its previous day’s closing of 11.72/76. In addition, considerable volumes on the three-and-a-half-year maturity was seen changing hands within a tight range of 11.49% to 11.50% while the two-year maturity was seen changing hands within a daily low of 10.88% to a high of 11.00%. In secondary bill markets, demand for bills prior and post auction saw January 2014 bills trade within 8.80% to 9.00%, May 2014 within 9.80% to 9.90%, July 2014 within 10.20% to 10.25%, August 2014 within 10.30% to 10.40% while the 364-day bill was seen been quoted at 10.40/45. Meanwhile in money markets, overnight call money and repo rates decreased marginally to average 8.42% and 7.99% respectively as surplus liquidity increased to Rs. 40.67 billion yesterday. The Central Bank refrained from conducting an overnight repo auction for an eighth consecutive day under its Open Market Operations (OMO) while Rs. 27.47 billion was seen been deposited at CBSL’s Repo window of 7.00%. However the OMO department drained out Rs. 13.20 billion for a period of seven days at a WAvg of 7.97% by way of a seven-day repo auction. In addition, its effort to drain out a further Rs. 9.4 billion by way of outright sales of Treasury bills for periods of 29 and 59 days was unsuccessful as no bids were received. Rupee gains to a two and a half month high Export conversions outweighing importer demand coupled with selling interest by banks on spot and forward dollar contracts saw the USD/LKR rate appreciate to a two and a half month high of Rs. 131.20 yesterday before closing at levels of Rs. 131.45/50. The total USD/LKR traded volume for the previous day (1 October 2013) stood at $ 60.06 million. Some of the forward dollar rates that prevailed in the market were 1-Month: Rs. 132.35, 3-Months: Rs. 134.05 and 6-Months: Rs. 136.58.