Primary market WAvgs tumble followed by secondary market yields
Wednesday, 30 October 2013 00:00
By Wealth Trust Securities
At the Treasury bond auctions conducted yesterday, the weighted average (WAvg) on all three maturities (i.e. 15 January 2019, 1 May 2028 and 1 November 2033) dipped to levels of 10.64%, 11.90% an 12.13% respectively against similar tenure maturities auctioned previously at WAvgs of 11.17%, 12.10% and 12.30%.
The auction, held in line with the bond maturity of Rs. 59.4 b due on 1 November, attracted bids in total of Rs. 22.1 b and saw Rs. 8.5 b being accepted. This was ahead of the scheduled weekly Treasury bill auction due today, which will have on offer an total amount of Rs. 10 b, of which Rs. 1 b each will consist of the 91 day and 182 day bills and Rs. 8 b of the 364 day bills.
At last week’s auction, the WAvgs dipped across the board to hit a 20 month low of 9.11% and 10.02% respectively on the 182 day 364 day bills while all bids for the 91 day bill were rejected.
Secondary bond markets
Meanwhile, in secondary bond markets, activity remained very high mainly on the maturities of 1 January 2017 and the liquid two five year maturities (e.g. 1 April 2018 and 15 August 2018).
The liquid two five year maturities opened the day at levels of 10.76/82 and 10.80/85 respectively and moved up to a daily high of 10.82% and 10.85% in morning hours of trading. However following the announcement of the bond auction results which saw the WAvg on the 15-01-2019 maturity dip to 10.64%, well below market expectations, yields dipped to a 10 month low of 10.70% and 10.75% respectively before closing the day at 10.78/82 and 10.84/86 once again on the back of profit taking. In addition, the 1 January 2017 maturity was seen changing hands within a daily low of 10.58% to a high of 10.66%.
Secondary bill markets
Meanwhile in secondary bill markets, demand for the 182 day and the 364 day maturities saw May 2014 bills change hands within the range of 8.85% to 9.00% while the latest one year was traded within the range of 9.75% to 9.80%.
Overnight call money and repo rates remained steady to average 7.85% and 7.10% respectively despite surplus liquidity in money markets decreasing to Rs. 5.59 b yesterday.
The Central Bank continued to mop up an amount of Rs. 0.33 b through its Open Market Operations at a WAvg yield of 7.46% for a period of seven days while a further amount of Rs. 5.26 b was deposited at its Repo rate of 6.50%.
Rupee dips marginally
Continued importer demand saw the rupee dip to Rs. 131.10 yesterday against its opening of Rs. 131.00. However, any further pressure on the USD/LKR rate was negated due to selling interest at levels of Rs. 131.10. The total USD/LKR traded volume for the previous day (26 October 2013) stood at US$ 48.96 million.
Some of the forward dollar rates that prevailed in the market were: one month – 131.96; three months – 133.64; and six months – 136.14.