Treasury bill auction yields resume upward trajectory

• Secondary bond market maintains sideways momentum; activity remains moderate
• Rupee continues to appreciate

By Wealth Trust Securities

At the weekly Treasury bill auction conducted yesterday, the weighted average yields were seen increasing marginally on the shorter tenors. The 91-day maturity increased by 04 basis points to 10.11%, while the 182-day maturity increased by 07 basis points to 10.30%. However, the 364-day maturity remained unchanged at 10.28%. Resuming an upward trajectory, after rates dropped last week following a knee-jerk reaction to last week’s policy rate cut. Prior to last week’s dip, yields had been on an increasing trend for 4 consecutive weeks.

The auction went undersubscribed, with only 98.02% or Rs. 132.33 billion out of the Rs. 135.00 billion offered raised at the 1st phase of the auction.

The 2nd phase of subscription, for only the 182- and 364-day maturities will be opened until 4:00 pm on the day before the settlement date (i.e., 04.04.2024) at the respective weighted averages determined at the 1st phase of the auction. Given below are the details of the auction;

Meanwhile, the secondary bond market yesterday continued to move mostly sideways for much of the day, with activity remaining moderate.  Accordingly, the liquid 2026 tenors (15.05.26 and 01.06.26) traded within the range of 11.30% to 11.25%. Similarly, the popular 2028 tenors of (15.03.28, 01.07.28 and 15.12.28) was seen changing hands between intraday highs of 12.17% and intraday lows 12.15%. Additionally, the shorter tenor 01.05.24 bond was seen transacted within the range of 9.85% to 9.75%, while the relatively longer tenor 01.07.32 was seen trading within the range of 12.62% and 12.60% both on the back of substantial volumes.

The total secondary market Treasury bond/bill transacted volume for 02nd April was Rs. 9.10 billion.

In money markets, the weighted average rates on overnight call money and Repo stood at 8.65% and 9.03% respectively while the net liquidity surplus Rs 98.49 billion yesterday. An amount of Rs. 9.67 billion was withdrawn from Central Banks SLFR (Standard Lending Facility Rate) of 9.50% against an amount of Rs. 148.16 billion deposited at Central Banks SDFR (Standard Deposit Facility Rate) of 8.50%. The DOD (Domestic Operations Department) of Central Bank injected liquidity by way of an overnight repo auction for Rs 40.00 billion at the weighted average rate of 8.60%.

Forex Market

In the Forex market, the USD/LKR rate on spot contracts closed the day appreciating to Rs. 299.80/299.95 against its previous day’s closing level of Rs. 299.95/300.05.

The total USD/LKR traded volume for 02nd April was US $ 110.50 million.

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