CB opts again for higher amount in Bond auction; Bids soar, rates on the up
Wednesday, 11 March 2015 00:35
The Central Bank yet again opted to take up a higher amount as opposed to the offered value at this week’s Treasury Bond auction whilst yield continued to head north.
Wealth Trust Securities said the Bond auction this week amounted to Rs. 30 billion and bids received were overwhelmingly high at Rs. 126 billion or over four times more. Given the response and the yield, the Central Bank accepted bids to the value of Rs. 51.8 billion.
Fortnight ago, given the surge in Government’s cash requirement, the Central Bank accepted Rs. 10 billion on the 30-year Bond issue as opposed to the offered amount of Rs. 1 billion.
Referring to yesterday’s Bond auction, Wealth Trust Securities said continued buyers’ market saw the upward momentum in primary market rates continue as the overall yield curve sustained its upward trend. The weighted average on the market favourite seven-year maturity of 01.07.2022 was recorded at 9.17% while the two new issues of the 10-year and 20-year maturities of 15.03.2025 and 15.03.2035 recorded weighted averages of 10.09% and 11.20% respectively.
See full report of Wealth Trust Securities on P7
Bourse dips for 7th straight session
Reuters: Stocks fell to a more than one-month low on Tuesday, losing for a seventh consecutive session, as investors stayed on the sidelines amid rising interest rates and political uncertainty ahead of Parliamentary elections.
The main stock index fell 0.09%, or 6.28 points, to 7,130.05, its lowest close since 5 February, extending the fall to 2.56% in the last seven sessions.
“Everybody is waiting for directions on the interest rates and political front,” a stockbroker said on condition of anonymity.
Foreign investors were net buyers of Rs. 106.9 million worth of shares, extending the year-to-date foreign inflow to Rs. 2.48 billion.
The Central Bank removed a penalty rate of 5% on its repo rate with effect from 2 March. The bank had imposed the penalty in September to discourage commercial banks from parking money with it at an interest rate of 6.5%.
The scrapping of the penalty resulted in a rise in t-bill yields of between 86 basis points and 91 basis points last Tuesday.
The Central Bank raised Rs. 51.8 billion ($389.77 million) through sale of Treasury bonds on Tuesday, 72.8% higher than what it offered. It borrowed $156.5 million through development bonds on Monday.
The Central Bank also plans to raise Rs. 20 billion ($150.49 million) through T-bills on Wednesday.
Elections to Sri Lanka’s 225-member Parliament are expected to be announced after 23 April and it is unclear whether the ruling coalition led by President Maithripala Sirisena would contest unitedly or go to the polls separately.
Political analysts expect a hung Parliament if Sirisena’s coalition members contest separately.
Shares in Ceylon Tobacco Company Plc fell 1.85%, while Ceylinco Insurance Company Plc fell 1.39%.
Turnover was Rs. 585.6 million, well below this year’s daily average of Rs. 1.37 billion.