Secondary bond market activity dries up considerably

By Wealth Trust Securities

Activity in the secondary bond market dried up considerably on Wednesday, with most market participants opting to be on the sidelines. Limited trades were witnessed of the 01.03.21, 01.08.25 and 15.05.30 maturities at levels of 9.92% to 9.98%, 10.37% to 10.40% and 10.55% to 10.58% respectively.

Nevertheless, the secondary bill market was relatively active with yields of the 91 day bill (i.e. May and June 2018 maturities) increasing to intraday highs of 8.45% and 8.60% respectively. Furthermore, bills maturing in January, February and March 2019 were seen changing hands within the range of 9.25% to 9.65%.

The inflation figure for the month of February reflected a further decrease for the fourth consecutive month, to 4.5% on the point to point, when compared against the previous month’s figure of 5.8%. The annual average decreased to 6.4%.

The total secondary market Treasury bond/bill transacted volumes for 27 February was Rs.9.80 billion.

In the money market, overnight call money and repo rates averaged at 8.12% and 7.51% respectively as the OMO Department of the Central Bank of Sri Lanka drained out an amount of Rs.12.35 billion at a weighted average yield of 7.26%, by way of an overnight repo auction. The net liquidity surplus remained high at Rs.34.44 billion.

Rupee loses again 

The USD/LKR rate on spot contracts was seen depreciating on Wednesday to close the day at Rs.155.10/25 against its previous day’s closing level of Rs.154.88/92 on the back of importer demand.

The total USD/LKR traded volume for 27 February was $ 93.45 million. Some of the forward USD/LKR rates that prevailed in the market were one month – 155.95/15; three months – 157.60/75; and six months – 160.10/30.