Monday May 06, 2024
Monday May 06, 2024
Tuesday, 16 April 2024 00:00 - - {{hitsCtrl.values.hits}}
By Wealth Trust Securities
In the primary bond market, last Monday’s (8 April 2024) round of Treasury bond auctions produced mixed results. Initially, the auction was undersubscribed, with only Rs. 38.43 billion raised at the 1st phase in competitive bidding. However, by the conclusion of the second phase the entire amount of Rs. 85.00 billion was successfully raised, issued at the weighted averages determined at the 1st phase across all three maturities. Accordingly, the total bids received overall exceeded the offered amount by 3.53 times. In terms of yields, the 15.12.26 maturity was issued at the weighted average rate of 11.44%, up from the previous auction on 15 March 2024 where the same maturity was issued at 11.33%. However, this was in line with the market two-way quote prior to the auction, as yields had since edged up. Meanwhile the 15.09.29 maturity, a new issuance, was issued at the rate of 12.37% which was also in line with the market two way for 2029 durations of 12.30%/12.50% prior to the auction. Similarly, the 01.10.32 was issued at the weighted average of 12.51%, which was slightly below the market two-way for 2032 tenors of 12.60%/12.70% prior to the auction.
At the weekly Treasury bill auction conducted on Tuesday due to a shortened trading week, the weighted average yields experienced marginal declines across all three tenors. The 91-day maturity reduced by 01 basis points to 10.10%, while the 182-day maturity decreased by 03 basis points to 10.27% and the 364-day maturity dropped by 01 basis point to 10.27%. The total offered amount of Rs 65.00 billion was the lowest offered amount in 25 weeks. Despite this, the auction went undersubscribed with only Rs. 58.21 billion or 89.55% out of the total offered amount being raised at the 1st phase of the auction.
The secondary bond market commenced the trading week ending 10 April on a subdued note, as market participants adopted a wait and see stance in the run up to the Rs. 85 billion Treasury bond auction. Post auction saw a slight increase in activity with some spurts of buying interest that saw yields decline marginally, while transaction volumes were moderate overall. The auction maturity of 15.12.26 in particular saw a noteworthy drop in its yield, down to intraweek lows of 11.30% from an intraweek high of 11.40%. Similarly, the 2028 tenors (01.07.28 and 15.12.28) were seen changing hands within intraweek highs and lows of 12.15% and 12.10%. However, the shorter tenor 01.07.25 and 01.08.25 was seen edging up to trade between 10.60% and 10.67%. Additionally, trades were observed on the medium tenor 15.05.30 and 01.07.32 at the rates of 12.47% and 12.62% respectively.
The foreign holding in Rupee bonds and bills for the week ending 9 February 2024 recorded a net outflow, amounting to Rs 6.24 billion. As a result, the total holding decreased to Rs. 85.41 billion, reversing gains from two consecutive weeks of net foreign inflows.
The daily secondary market Treasury bond/bill transacted volumes for the first two days of the week averaged at Rs. 41.34 billion.
In money markets, the total outstanding liquidity surplus increased to Rs. 49.81 billion by the week ending 10 April from its previous week’s surplus of Rs. 19.21 billion. The Domestic Operations Department (DOD) of Central Bank continued to inject liquidity during the week by way of overnight and term reverse repo auctions at weighted average yields ranging from 8.60% to 8.67%.
The Central Bank of Sri Lanka’s (CBSL) holding of Government Securities was registered at Rs. 2,675.62 billion as at 10 April 2024, unchanged from its previous week’s level.
Forex Market
In the Forex market, the USD/LKR rate on spot contracts was seen appreciating during the week to close at Rs. 298.50/298.55. This is as against its previous weeks closing level of Rs. 299.20/299.30 and subsequent to trading at a high of Rs. 298.50 and a low of Rs. 299.00.
The daily USD/LKR average traded volume for the first two trading days of the shortened week stood at $ 77.55 million.
(References: Central Bank of Sri Lanka, Bloomberg E-Bond trading platform, Money broking companies)
