Activity in secondary bond market increases

By Wealth Trust Securities

The weighted average on the market favorite 364 day bill was seen decreasing for a fourth consecutive week at its weekly auction conducted yesterday recording a dip of five basis points to 8.54%. 

The present Standing Lending Facility Rate (SLFR) stands at 8.50%. The weighted averages on the 91 day bill and 182 day bill decreased more aggressively by eight and 11 basis points respectively to 8.09% and 8.21%. The total offered amount of Rs. 22.5 billion was successfully accepted as the ratio of total bids received to total offered amount increased to 3.68:1. 

This was ahead of today’s monetary policy announcement, the fourth for the year, due at 4:30 p.m. The Central Bank of Sri Lanka cut its policy rates by 50 basis points each to 7.50% and 8.50% respectively on its Standing Deposit Facility Rate (SDFR) and Standing Lending Facility Rate (SLFR) at its announcement on 31 May.  

The activity in secondary bond market increased yesterday as yields were seen decreasing on the back of continued buying interest. The yields on the liquid shorter maturities of four 2021s (i.e. 01.03.21, 01.08.21, 15.10.21 and 15.12.21) were seen hitting intraday lows of 8.80%, 8.90%, 8.95% each respectively against its previous day’s closing levels of 8.85/95, 8.95/05, 9.05/10 and 9.05/12. In addition, the maturities of 15.07.23, 2024s (i.e.15.03.24 and 15.06.24), 01.08.26 and 15.01.27 decreased to lows of 9.55%, 9.75% each, 10.04% and 10.09% respectively as well.  

The total secondary market Treasury bond/bill transacted volumes for 9 July was Rs. 3.25 billion. 

In money markets, the OMO (Open Market Operations) Department of the Central Bank of Sri Lanka was seen draining out an amount of Rs. 5.6 billion by way of an overnight repo auction at weighted average rate of 7.76% as the overnight net liquidity surplus stood at Rs. 18.97 billion. The overnight call money and repo rates averaged 7.80% and 7.85% respectively. 

Rupee continues appreciating trend 

 The USD/LKR rate on the active spot contract continued to appreciate yesterday to close the day at Rs. 175.55/65. 

The total USD/LKR traded volume for 9 July was $ 107.75 million

Some of the forward USD/LKR rates that prevailed in the market were: one month – 176.20/35; three months – 177.40/70; and six months – 179.35/65.