Secondary market treasury yields steady as primary market yields increase

Wednesday, 27 February 2013 00:00 - - {{hitsCtrl.values.hits}}

By Wealth Trust Securities

Secondary market bond yields closed the day mostly unchanged yesterday against its last week’s closing levels mainly on the two liquid five year maturities (i.e. 1 April 2018 and 15 August 2018) at levels of 11.10/15% subsequent to increasing to an intraday high of 11.20% and dropping to a low of 11.10%.

The weighted average (WAvg) for the five year bond auction conducted yesterday was at 10.97% reflecting an increase of 24 basis points (bp) against a similar maturity, auctioned on 12 February, which fetched a yield of 10.73%.

However, interestingly, this WAvg was 15 bp below the secondary market yields for similar durations. Furthermore the 10-year maturity which was auctioned for the first time during the year recorded a weighted average of 11.76%.

Meanwhile in secondary market Treasury bills, the 364 day bill was seen been quoted at levels of 11.10/14% ahead of its weekly auction due today. The Central Bank announced in total an amount of Rs. 15 b on offer, lower from its last week’s offered amount of Rs. 21 b. At last week’s auction, WAvg remained unchanged.

Liquidity increases once again

The surplus liquidity in money markets increased once again to Rs. 44.5 b yesterday as an amount of Rs. 42.7 b was drained out by way of an overnight Repo auction conducted by the Open Market Operations (OMO) department of Central bank at a WAvg of 8.35%. However, all attempts of draining out liquidity on a term basis was not successful, as all bids for the sale of outright Treasury bills and a repo auction were rejected. Overnight call money and repo rates remained steady to average 9.44% and 8.54% respectively.

Rupee continues to depreciate marginally

In Forex markets, the rupee depreciated marginally yesterday to close the day at Rs. 127.48 against its last week’s closing of Rs. 127.45. The total USD/LKR traded volume for the previous day (22 February 2013) stood at US$ 66.75 million.

Given are some forward dollar rates that prevailed in the market: one month – 128.28; three months – 130.13; and six months – 132.95.