Maximum yield guidance removed for T-bill auction

• Bond yields fluctuate
• Overnight liquidity shortage increases

By Wealth Trust Securities

The maximum yield guidance or stipulated cut off rate given for the weekly Treasury bill auctions was removed for its upcoming auction next week following its introduction in April 2020. 

The cut-off rate at this week’s auction was set at 6.12% on the 364 day bill while the 91 day and 182 bills weighted averages were decided below it.

The above news saw sentiment in the secondary bond market turn negative towards the latter part of yesterday subsequent to a bullish run during morning hours of trading due to the successful outcome on the direct issuance window for the 15.03.2031 Treasury bond auction. In morning hours of trading, buying interest on 2024 maturities (i.e. 15.09.24 and 01.12.24) saw its yields dip to 7.98% and 8.00% respectively as against its previous day’s closing of 8.00/20. 

In addition, 15.07.23, 15.01.26 and 01.07.28 maturities were seen changing hands at levels of 7.00%, 8.90% and 9.50% respectively. Yields bounced backed towards the later part of the day as the 15.07.23 and 01.12.24 edged up to 7.15% and 8.20% respectively once again.   

The total secondary market Treasury bond/bill transacted volume for 15 September was Rs. 3.85 billion.   

In money markets, the net liquidity shortage increased to over Rs. 200 billion once again to record a deficit of Rs. 209.83 billion yesterday with an amount of Rs. 293.24 billion been withdrawn from Central Banks SLFR of 6.00% against an amount of Rs. 83.41 billion deposited at Central Banks SLDR of 5.00%. The weighted average rates on overnight call money and repo was registered at 5.96% and 5.92% respectively.

USD/LKR   

In the Forex market, the overall market continued to remain inactive yesterday.

The total USD/LKR traded volume for 15 September was $ 19.00 million.   

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