Secondary market yields steady as weighted averages at primary auctions reflect mix results

Monday, 4 March 2013 00:00 - - {{hitsCtrl.values.hits}}

By Wealth Trust Securities

The upward trend in secondary market yields witnessed the previous week continued at the start of this week as the weighted average (WAvg) for the five year bond auction conducted on 26 February was at 10.97%, reflecting an increase of 24 basis points against a similar maturity auctioned during the early part of February.

However, with the results of weekly Treasury bill auction which saw WAvg’s remain steady on the 182 day and 364 day bills at 10.08% and 11.10% respectively, while the 91 day reflected a dip of 01 basis point to 9.09% coupled with inflation for the month of February on a point to point basis remaining unchanged at 9.80%, saw secondary market yields dipped marginally towards later part of the week. This led to the two liquid five year maturities (i.e. 1.4.2018 and 15.8.2018) closing the week at levels of 11.10/15% subsequent to increasing to an intraweek high of 11.20%. Nevertheless, selling pressure on secondary market bills was evident throughout the week with the 364 day bill been quoted at levels of 11.10%-11.15%.

Meanwhile in money markets, despite several attempts only an amount of Rs. 2 billion was mopped up from the system on a long term basis with a tenure of 53 days by way of outright sales of Treasury bills conducted by the Open Market Operations (OMO) department of Central Bank. This led to surplus liquidity remaining high to close the week at Rs. 35.84 billion, with liquidity being drained on a daily basis at an average of 8.35%. This intern helped overnight call money and repo rates to remain stable to average 9.44% and 8.54% respectively for the week.

Rupee remained stable during the week

The dollar rupee rate remained unchanged during the week within the range of Rs. 127.40-127.50 as volumes moderated. The total USD/LKR traded volume for the first three days of this week stood at US$ 36.53 million. Following are some forward dollar rates that prevailed in the market: one month – 128.27, three months – 130.12, six months – 132.97.