Treasury Bill WAY increases for the first time in six weeks

Thursday, 18 October 2012 00:38 - - {{hitsCtrl.values.hits}}

The Central Bank’s borrowing costs increased across all maturities for the first time in six weeks at its weekly Treasury Bill auction held yesterday, according to Wealth Trust Securities.

It said the 364-day bill reflected the highest increase of eight basis points (bp) to 12.37%. As much as 58% was accepted on the 364-day maturity out of the total accepted amount of Rs. 11.9 billion, reflecting the market’s continued appetite for this duration. Furthermore, weighted averages on the 91-and 182-day bills increased by three bp and six bp as well, respectively.

Secondary market Treasury yields dipped in early hours of trading yesterday with the three-year maturity dipping the most to an intraday low of 12.38% while the five-year maturity dipped to a low of 12.85%. However, selling interest at these levels saw its yields increase once again to levels of 12.50% and 12.90% respectively prior to the announcement of the weekly Treasury Bill auction.

Following the auction results, yields increased further to close the day at levels of 12.75% and 13.10%, reflecting increases of 15 bp each against its previous day’s closing levels. Furthermore activity was witnessed on the six-year maturity as well at levels ranging from 13.25% to 13.50%.

On a more positive note, Wealth Trust Securities said the Open Market Operations Department of the Central Bank conducted a repo auction yesterday after a lapse of three days, a tool used to drain excess liquidity from the system. An amount of Rs. 5 billion was drained from the system at a weighted average of 9.33% as overnight call money and repo rates remained steady to average 10.57% and 9.66% respectively.

However, an amount of Rs. 0.95 billion was accessed once again from its reverse repo window rate of 9.75%, while an amount of Rs. 0.19 billion was deposited at Central Bank’s repo window rate of 7.75%, brining overnight liquidity to a net surplus of Rs. 4.2 billion.

Meanwhile, the USD/LKR rate remained steady yesterday; to close the day at Rs. 128.80/128.85. The total USD/LKR volume for the previous day (16 October 2012) was at US$ 47.72 million.