364-day bill weighted average dips for first time in eight weeks

• Bids-to-offer ratio increases to 10-week high
•  Bond yields increase marginally ahead of bond auctions 
• First monetary policy announcement for the year in focus

By Wealth Trust Securities 

The market favourite 364 day bill weighted average at yesterday’s Treasury bill auction was seen declining for the first time in eight weeks, reversing its upward movement.  

It recorded a drop of two basis points to 8.59% while the weighted average on the 91 day bill witnessed a drop of four basis points to 7.51%. The weighted average yield on the 182 day bill remained steady at 8.15%. The total offered amount of Rs. 26.5 billion was fully accepted by way of the accepted amount on the 364 day bill amounting to 91.70% of this volume. The total bids to total offered ratio was seen increasing to a 10-week high of 3.22:1.  

In the secondary bond market yesterday, the downward movement in yields was seen reversing subsequent to auction results as the liquid maturities of 15.06.24 and 15.09.24 hit intraday highs of 9.45% and 9.48% respectively against opening lows of 9.40% each. Furthermore, the 2021 maturities (i.e. 01.03.21 and 01.08.21) were seen trading within the range of 8.60% to 8.70%, 15.12.23 within 9.28% to 9.30% and the 15.03.24 at 9.40%.  

Meanwhile, in secondary bills, the October 2020 and January 2021 maturities changed hands at levels of 8.30% and 8.48% to 8.55% respectively. This was ahead of today’s monetary policy announcement due at 7.30 a.m., the first for 2020. 

Today’s Treasury bond auctions will have in total an amount of Rs. 32.5 billion on offer, consisting of Rs. 15 billion on a four-year and seven-month maturity of 15.09.2024 and Rs. 17.5 billion on a seven-year and eight-month maturity of 15.10.2027. The weighted average yields at the auctions conducted on 13 January 2020 for the maturities of 01.09.2023 and 15.05.2030 were recorded at 9.39% and 9.99% respectively.  

The total secondary market Treasury bond/bill transacted volume for 28 January 2020 was Rs. 9.30 billion.

In money markets, the overnight call money and repo rates averaged 7.47% and 7.50% respectively as the Domestic Operations Department (DOD) of the Central Bank of Sri Lanka was seen draining out an amount of Rs. 11.68 billion at a weighted average of 7.51% by way of an overnight repo auction. The overnight net liquidity surplus in the system increased further to Rs. 36.18 billion.  

Rupee appreciates marginally    

 In the Forex market yesterday, the USD/LKR rate on spot contracts was seen appreciating marginally to close the day at Rs. 181.45/55 against its previous day’s closing levels of Rs. 181.55/60 on the back of export conversions and selling interest by banks. 

The total USD/LKR traded volume for 28 January 2020 was $ 56.75 million.

Some of the forward USD/LKR rates that prevailed in the market were : one month - 181.90/10, three months - 182.90/10 and six months - 184.50/75.