Positive sentiment continues in bond markets for 2nd consecutive week

Monday, 7 April 2014 00:00 - - {{hitsCtrl.values.hits}}

By Wealth Trust Securities The bullish sentiment witnessed in secondary bond markets for the week ending 28 March, was seen continuing during the week ending 4 April as well, boosted by the news of the planned US $ 500 million sovereign bond issue by the Government of Sri Lanka and the outcome of inflation for the month of March.

Yields were seen dipping during the week mainly on the liquid two 2018 maturities (01.04.2018 & 15.08.2018) and the 01.07.2019 maturity to monthly lows of 8.70%, 8.83% and 9.07% respectively against its previous weeks closing levels of 8.80/83, 8.88/93 and 9.18/22. However, profit taking at these levels saw yields gain once again marginally to close the week at levels of 8.77/80, 8.87/91 and 9.11/14. In addition, a limited amount of activity was witnessed on the maturities of 01.11.2015, 15.07.2017 and 01.05.2021 during the week within the ranges of 7.53% to 7.58%, 8.20% to 8.30% and 9.93% to 9.97% respectively. Meanwhile demand for secondary market bills continued during the week, mainly centering the 182-day and 364-day maturities to change hands within the range of 6.80% to 6.90% and 7.00% to 7.10% respectively, pre its weekly auction.

Meanwhile in money markets, Overnight call money and repo rates remained steady to average 6.98% and 6.57% for the week as average surplus liquidity in the system increased to Rs. 11.62 billion against its previous week’s average of Rs. 7.95 billion. Rupee gains marginally during the week The rupee closed the week marginally higher at Rs. 130.60/62 against its previous weeks closing of Rs. 130.70/73 subsequent to hitting a weekly high of Rs. 130.55 on the back of inward remittances and the news of the sovereign dollar bond issue. The daily average USD/LKR traded volume for the first four days of the week was at $ 82.97 million. Some of the forward dollar rates that prevailed in the market were 1-Month: Rs. 131.22, 3-Months: Rs. 132.36 and 6-Months: Rs. 133.81.