Secondary market bond yields continue to increase ahead of bill auction

Tuesday, 13 January 2015 01:38 - - {{hitsCtrl.values.hits}}

Yields seen hitting six month high levels By Wealth Trust Securities The upward trend in secondary market Treasury bond yields continued yesterday as well on the back of considerable selling interest with the liquid maturities of 1 April 2018, 1 July 2019 and 1 July 2022 reflecting increases of 45 basis points (bp), 30 bp and 33 bp respectively during the day to intraday highs of 8.00%, 8.10% and 8.53% in comparison to its previous day’s closing levels of 7.40/70, 7.70/90 and 8.15/25 as volumes traded were seen increasing. In addition, the 1 May 2021 maturity was seen changing hands within the range of 8.15% to 8.30% as well. Meanwhile selling pressure on secondary market bills saw April 2015 and May 2015 maturities changing within the range of 5.80% and 5.90% respectively while November 2015 bills were quoted at levels of 6.00% to 6.35%. This was ahead of today’s crucial bill auction where a total amount of Rs. 15 billion will be on offer consisting of Rs. 2 billion on the 91 day, Rs. 3 billion on the 182 day and Rs. 10 billion on the 364 day maturity. At last week’s auction, the weighted averages on the 91 day and 182 day bills increased by two basis points each to 5.76% and 5.86% respectively while the weighted average on the 364 day bill decreased by one basis point to 6.00%. In money markets, overnight call money and repo rates decreased further to average 5.95% and 5.18% respectively as the Central Bank refrained from conducting any auctions under its Open Market Operations (OMO) yesterday. Surplus liquidity stood at Rs. 13.49 billion. Rupee trades within a narrow band The USD/LKR rate on spot next-next contracts was seen trading within a narrow band of Rs. 132.70 to Rs. 132.75 yesterday. The total USD/LKR traded volume for 9 January was $ 21.50 million. Some of the forward dollar rates that prevailed in the market were: one month – 133.25; three months – 134.30; and six months – 135.30.

Rupee forwards flat in dull trade Reuters: Rupee forwards ended steady on Monday in dull trade as the market awaited direction after Maithripala Sirisena won the presidential election. Former President Mahinda Rajapaksa lost his bid for a third term on Friday, ending a decade of rule that critics say had become increasingly authoritarian and marred by nepotism and corruption. Four-day forwards, which were actively traded, ended unchanged at 132.75/85 per dollar, dealers said. They said investors were concerned because the Sirisena administration has said it will do an audit on macroeconomic numbers and reveal any manipulation during the Rajapaksa regime. The market is expecting a flexible exchange rate with more foreign grants under Sirisena’s rule as opposed to the fixed and controlled exchange rate regime and more foreign borrowing under the previous government. Rupee forwards were maintained around 132.00 in December as the Central Bank defended the currency through moral suasion. The spot was not traded on Monday. Dealers said unusually high imports towards the end of 2014, amid lower interest rates and a stable exchange rate pressured the rupee. The spot currency remained between 130.00 and 131.75 rupees throughout 2014, with the Central Bank defending it at both ends to ensure a stable exchange rate.

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