Rs. 100 b T-Bond auction delivers mixed results

• Secondary Bond market yields trade broadly steady; activity subdued
• Rs. 90 b T-Bill auction in focus

By Wealth Trust Securities

The Treasury Bond auctions conducted yesterday, raised Rs. 80.69 billion or 80.69% in total as against a total offered amount of Rs. 100 billion across both the first and second phases. The auction recorded a mixed outcome with weighted averages coming in slightly above or in line with pre-auction market two-ways.

The bids received to accepted amount ratio stood at 2.89 times. Maturity-wise the results were as follows:

1.The shorter tenor 15.09.29 maturity was issued at a weighted average yield of 11.00%, in line with the bid rate of its pre-auction secondary two-way quote of 10.90%/11.00%. The entire offered volume was raised at its first phase.

2.The 01.12.31 maturity was issued at a weighted average yield of 11.67%, marginally above its pre-auction market two-way of 11.60%/11.65%. The entire offered volume was raised at its 1st phase.

3.The 15.08.36 maturity was issued at a weighted average of 12.33% in line with the bid rate of its pre-auction market two-way of 12%/12.30%.

The secondary Bond market yesterday saw rates open broadly steady and consolidate. Post-auction as well rates were seen continuing to hold broadly steady across majority of the yield curve. Activity and transaction volumes were seen at subdued levels.

In the trade summary, the 15.12.28 maturity traded at the rate of 10.62%, the 15.10.30 traded at the rate of 11.40% and the 01.11.33 maturity at the rate of 11.95%, earlier in the session, prior to the auction results. The 01.12.31 auction maturity traded within the range of 11.60%-11.65%, both before and after the auction outcome.

The Treasury Bill auction scheduled for today will have a total of Rs. 90 billion on offer, comprising of Rs. 40 billion on the 91-day maturity, Rs. 30 billion on the 182-day maturity and Rs. 20 billion on the 364-day maturity. The amount on offer is slightly above the estimated Rs. 82.09 billion in maturities corresponding to the auction.

For context, at the weekly Treasury Bill auction conducted last Wednesday, weighted average yields were seen edging up very marginally only on the 91 day and 182-day tenors, while the 364-day remained steady following three consecutive weeks of increases across all 3 tenors.  

Accordingly, the 91-day yield rose by one basis points to 9.26% and the 182-day by 3 basis points to 9.44% while the rate of the 364-day tenor held unchanged at 9.95%.

Total bids received amounted to 2.06 times the overall offer. Demand extended to the second phase. The second phase was oversubscribed receiving bids amounting to Rs. 16.03 billion as against an offered amount of Rs. 8 billion. Accordingly, the entire offered amount was raised leading to an aggregate subscription of Rs. 88 billion across both phases.

In the money market, the net liquidity surplus was recorded at Rs. 115.83 billion yesterday. Of this, Rs. 104.98 billion was deposited at the Central Bank’s SDFR (Standing Deposit Facility Rate) of 8.25%, while Rs. 0.16 billion was withdrawn from the Central Bank’s SLFR (Standing Lending Facility Rate) of 9.25%.

In addition, the Domestic Operations Department (DOD) of the Central Bank of Sri Lanka absorbed Rs. 11 billion via an overnight repo auction at the rate of 8.71%.

The weighted average yields on overnight call money and repos were recorded at 8.99% and 9.04% respectively.

Forex market 

The USD/LKR spot rate or the rupee closed at Rs. 331.00/331.07 yesterday, compared with Rs. 330.95/331.00 on the previous day. The total USD/LKR traded volume for 12 October amounted to $ 25.88 million. 

(References: Public Debt Management Office - Ministry of Finance, Central Bank of Sri Lanka, Bloomberg E-Bond Trading Platform, Money Broking Companies)