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Secondary Bond market yields edge up; activity picks up post-auction

By Wealth Trust Securities

The Treasury Bond auctions conducted yesterday, successfully raised the entire Rs. 100 billion offered at the first phase in competitive bidding. The auctions recorded a mixed outcome with weighted averages coming in line or above pre-auction market two-ways.

The bids received to accepted amount ratio stood at 2.19 times. Maturity-wise the results were as follows:

The shorter tenor 15.05.30 maturity was issued at a weighted average yield of 11.44%, in line with its pre-auction secondary market two-way quote of 11.40%/11.50%.
The 15.10.34 maturity was issued at a weighted average yield of 12.61%, marginally above its pre-auction secondary market two-way of 12.50%/12.55%.
The 15.08.36 maturity was issued at a weighted average of 12.85%, above its pre-auction two-way quote of 12.30%/12.70%.

The secondary Bond market yesterday saw rates open broadly steady and consolidate ahead of the Treasury Bond auction outcome. Post-auction rates were seen adjusting to the auction outcome which triggered renewed buying interest. As a result, secondary Bond market two-way quotes closed marginally higher along much of the yield curve. Activity and transaction volumes increased to elevated levels post auction from the relative lull of earlier in the day.

In the trade summary, the 15.09.29 maturity traded at the rate of 11.15%. The 01.08.30 and 15.10.30 maturities traded at the rates of 11.60% and 11.60% to 11.62% respectively. The 01.02.31 maturity traded at the rate of 11.70% and the 15.03.31 maturity traded up the range of 11.74% to 11.80%. The 15.12.32 maturity saw its rate decline down the range of 12.20%-12.15%. The 15.06.34 and 15.09.34 maturities were seen trading at the rates of 12.50% and 12.55% respectively. The auctioned 15.10.34 maturity traded within the range of 12.65% down to 12.60%, post auction. The 15.08.36 maturity traded at the rate of 12.90% down to 12.88%, post auction.

In the money market, the net liquidity surplus was recorded at Rs. 116.34 billion yesterday. Of this, Rs. 84.34 billion was deposited at the Central Bank’s SDFR (Standing Deposit Facility Rate) of 8.25%, while Rs. 5 billion was withdrawn from the Central Bank’s SLFR (Standing Lending Facility Rate) of 9.25%.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. 37 billion via an overnight repo auction at the rate of 8.75% and an Rs 10.00 billion 31-day term repo auction at the rate of 9.23%.

The weighted average yields on overnight call money and repos were recorded at 9.03% and 9.09% respectively.

Forex market

The USD/LKR spot rate or the rupee closed at Rs. 332.55/332.65 yesterday, compared with Rs. 332.50/332.60 on the previous day. The total USD/LKR traded volume for 28 October amounted to $ 55 million.

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