Market favourite 91-day T-bill phase II opens

• Secondary bond market remains active with yields moving sideways
• Rupee marginally appreciates further

 By Wealth Trust Securities

The 2nd phase of the T-bill auction was opened on 91-day maturity at its auction held yesterday, the first such instance since end January 2024 as auction went undersubscribed for a second consecutive week. While the weighted average rates were seen increasing across all three maturities, albeit marginally, for the first time since end August of 2023. This follows an extended period where rates had been on a steady decline, with decreases observed in at least one tenor over the last 25 weeks. The 91-day and 182-day maturities increased by 9 basis points each to 9.87% and 9.95% respectively, while the 364-day maturity also went up by 03 basis points to stand at 10.05% respectively.

Only 85.15% or Rs. 104.31 billion of the total offered amount of Rs. 122.50 billion was raised at the 1st phase of the auction.

The 2nd phase of subscription, across all three maturities will be opened until 4:00 p.m. on the day before the settlement date (i.e., 29.02.2024) at the respective weighted averages determined at the 1st phase of the auction. Given below are the details of the auction;

Meanwhile, the secondary bond market yesterday remained active with robust volumes being utransacted, however yields fluctuated within a narrow band during the day. Trading continued to be focused primarily on the short-end of the yield curve with some notable transactions happening on medium tenor bonds. The bulk of the trading was observed on 2026-2028 tenors. The market was seen trading sideways on the 2026 tenors (01.08.26 and 15.12.26) within the range of 11.05% to 10.95%. On the 2027 maturity of 15.09.27 considerable volumes were seen transacted within the range of 11.95% to 11.85%. Similarly, 2028 tenors of (15.03.28, 01.05.28, 01.07.28, 01.09.28 and 15.12.28) were seen changing hands within the band of 12.20% to 12.05%, with large volumes transacted. Notably interest was observed on the relatively longer tenor bonds of 15.05.30, and 15.05.31 within the ranges of 12.23% and 12.54%. In conclusion, at the close of the day two-way quotes remained broadly steady.

The total secondary market Treasury bond/bill transacted volume for 27 February was 

Rs. 8.59 billion.

In money markets, the weighted average rates on overnight call money and repo stood at 9.19% and 9.77% respectively while the net liquidity deficit stood at 

Rs. 39.98 billion yesterday.

An amount of Rs. 4.45 billion was deposited at Central Bank’s SDFR (Standing Deposit Facility Rate) of 9.00% while an amount of Rs. 0.49 billion was withdrawn from the Central Bank’s SLFR (Standing Lending Facility Rate) of 10.00%. The DOD (Domestic Operations Department) of Central Bank injected liquidity by way of overnight repo auctions for Rs. 43.94 billion at the weighted average rate of 9.13% respectively.

Forex Market

In the Forex market, the USD/LKR rate on spot contracts closed the day appreciating at Rs. 310.00/310.15 against its previous day’s closing level of 

Rs. 310.25/310.50.

The total USD/LKR traded volume for 27 February was $ 57.42 million.

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