Impressive sovereign dollar bond issue sees activity increase in secondary bond markets

Wednesday, 8 January 2014 00:00 - - {{hitsCtrl.values.hits}}

By Wealth Trust Securities The successful launch and attractive pricing at 6.00% for the $ 1 billion Sri Lankan sovereign dollar bond issue for a period of five years yesterday saw activity increase in secondary bond markets ahead of today’s weekly Treasury bill auction. Once again, activity centered on the liquid two 2018 maturities (i.e. 01.04.2018 and 15.08.2018) as its yields were seen dipping to intraday lows of 8.72% and 8.80% respectively during morning hours of trading. However, selling interest on the back of profit taking from this point onwards saw yields increase marginally to intraday highs of 8.88% and 8.90% and closed the day lower at 8.83/88 and 8.87/92 in comparison to its previous days closings.

In addition, a limited amount of activity was witnessed on the 2016 maturities within the range of 8% to 8.20% while the 2019 maturities were seen changing hands within the range of 9.05% to 9.20%. At today’s auction, a total amount of Rs. 15 billion will be on offer which will consist of Rs. 2 billion, Rs.3 billion and Rs. 1 billion on the 91-day, 182-day and the 364-day maturities respectively. At last week’s auction, weighted averages on all three maturities declined for a 15th consecutive week to 7.42%, 7.53% and 7.95% respectively. Meanwhile in secondary bill markets the 364-day bill was seen changing hands within the range of 7.40% to 7.45%. Meanwhile in money markets, an amount of Rs. 59.43 billion was deposited at CBSL’s Standing Deposit Facility Rate (SDFR) of 6.50% yesterday as the Open Market Operations (OMO) department continued to refrain from conducting any auctions. Overnight call money and repo rates remained steady to average 7.50% and 6.94% respectively. Rupee dips marginally Meanwhile in Forex markets yesterday, the USD/LKR rate dipped marginally to Rs. 130.80/85 on the back of demand for forward dollar contracts in comparison to previous day’s closing of Rs. 130.70/75. The total USD/LKR traded volume for the previous day (6 January 13) stood at $ 69.50 million. Some of the forward dollar rates that prevailed in the market were 1-Month: Rs. 131.20; 3-Months: Rs. 131.80 and 6-Months: Rs. 132.70.