364 day bill weighted average decreases by 01 basis point

• Bond rally continues ahead primary bond auctions

By Wealth Trust Securities

The 364 day bill weighted average decreased by only 01 basis point to 10.69% at its weekly auction conducted yesterday as the total offered amount of Rs. 21 billion was fully accepted only on this maturity, rejecting all bids for the 182 day maturity. The total bids to offer ratio increased to a four week high of 2.82:1.  

The secondary bond market rally continued as yields decreased further yesterday, recording its second consecutive day of declines, on the back of continued buying interest. Yields on the liquid maturities of the three 2023s (i.e. 15.05.23, 15.07.23 and 15.12.23), 15.03.25 and two 2026s (i.e. 01.06.26 and 01.08.26) and 01.09.28 were seen decreasing to intraday lows of 11.12% each, 11.03%, 11.28%, 11.27%, 11.24% and 11.35% respectively against its previous day’s closing levels of 11.20/27 each, 11.20/23, 11.30/40, 11.40/45, 11.40/45 and 11.52/60. Furthermore, the two 2021s (i.e. 01.03.21 and 15.12.21) and 15.06.27 maturities were also traded at levels of 10.70% to 10.75%, 10.85% to 10.90%, and 11.30% to 11.32% respectively. In the secondary bill market, November & December 2018 and January 2019 maturities were traded at levels of 10.50% and 10.65% to 10.70% respectively as well.

Today’s Treasury bond auctions will have an total amount of Rs. 50 billion on offer, consisting of Rs. 25 billion each on a 2 year and 6 months maturity of 01.08.21 and a new 7 year and 11 months maturity of 15.01.27. The previous Treasury bond auctions conducted on 11 January for the maturities of 15.12.23 and 01.09.28 recorded weighted average yields of 11.58% and 11.73% respectively.The total secondary market Treasury bond/bill transacted volumes for 28 January was Rs. 5.51 billion. 

In the money market, the OMO Department of the Central Bank of Sri Lanka was seen infusing an amount of Rs. 40 billion at a weighted average of 9.00%, by way of an overnight reverse repo auction as the net liquidity shortfall in the system stood at Rs. 106.35 billion yesterday. The overnight call money and repo rates averaged at 9.00% and 8.99% respectively.

 

Rupee strengthens further

The continued foreign buying in rupee bonds along with export conversions saw the rupee appreciate for a second consecutive day, as the USD/LKR rate on spot contracts closed at Rs. 179.25/50 against its previous day’s closing levels of Rs. 180.80/95.

The total USD/LKR traded volume for 29 January was $73.65 million.

Some of forward USD/LKR rates that prevailed in the market were one month - 180.10/40; three months - 182.10/40 and six months - 185.05/45.