Bond market activity remains dull

• Rs. 92 billion T. Bill auction in the spotlight
• Rupee gains

 

By Wealth Trust Securities

The secondary bond market on 22 April was lacklustre, with modest transaction volumes and yields holding broadly stable. 

Apart from some notable demand witnessed on the shorter tenor bonds of 15.01.25 and 01.06.25 transacting at the rates of 10.25% and 10.40% respectively. Additionally, trades were witnessed on the 01.06.26, 15.09.27 and 15.05.30 within the ranges of 11.15%, 12.00% to 11.96% and 12.30% respectively.

The Treasury bill auction due today will see a total volume of only Rs. 92 billion on offer, an increase of Rs. 14 billion from the previous week. This will consist of Rs. 35 billion on the 91-day maturity, Rs. 30 billion on the 182-day and Rs. 27 billion on the 364-day maturities.

For context, at the weekly Treasury bill auction conducted last Wednesday (17 April), the weighted average yields were seen decreasing across all three maturities for a second consecutive week. The 91-day maturity reduced by 7 basis points to 10.03%, while the 182-day maturity decreased by 5 basis points to 10.22% and the 364-day maturity dropped by 4 basis point to 10.23%. 

The entire offered amount of Rs. 78.00 billion was taken up at the 1st phase, with bids received exceeding the offered amount by 2.5 times. Subsequently the 2nd phase of subscription was opened across all tenors at the weighted averages determined at the 1st phase. Where an additional amount of Rs. 7.80 billion was raised across all three maturities being the maximum amount offered, out of total market subscription of a staggering Rs. 75.94 billion.

The total secondary market Treasury bond/bill transacted volume for 19 April was Rs. 9.59 billion.

In money markets, the weighted average rate on overnight call money was at 8.61% and repo was at 8.75%.

The net liquidity surplus stood at Rs. 116.84 billion yesterday as an amount of Rs. 0.66 billion was withdrawn from Central Bank’s SLFR (Standard Lending Facility Rate) of 9.50% against an amount of Rs. 190.33 billion deposited at Central Bank’s SDFR (Standard Deposit Facility Rate) of 8.50%. 

Further, the DOD (Domestic Operations Department) of Central Bank injected liquidity by way of an overnight and 7-day term reverse repo auction for Rs. 12.83 billion and Rs. 60.00 billion at the weighted average rates of 8.75%.

Forex market 

In the forex market, the USD/LKR rate on spot contracts closed the day up at Rs. 300.40/300.60 against its previous day’s closing level of Rs. 302.00/302.50.

The total USD/LKR traded volume for 19 April was $ 25.45 million.

(References: Central Bank of Sri Lanka, Bloomberg E-Bond trading platform, Money broking companies)