Activity muted ahead of bond auctions; rupee flat

Tuesday, 12 December 2023 00:40 - - {{hitsCtrl.values.hits}}

By Wealth Trust Securities

The secondary bond market commenced the week with somewhat restrained activity ahead of the upcoming bond auctions, with yields holding broadly steady. Market players were seen adopting a wait and see approach ahead of the upcoming bond auctions and the IMF board level decision on the first review of the EFF program. Nevertheless, a spurt of trading concentrated on the maturities of 15.05.26 and 15.09.27 were seen at 14.15% and 14.22% respectively. Additionally, limited trades were seen on the maturities of 25’s (01.06.25 and 01.07.25), 15.01.27 and 01.07.28, as it changed hands at levels of 13.50% to 13.45%, 14.05% and 14.25% to 14.24% respectively.

Meanwhile, in secondary market bills, December maturities were seen trading at 12.00% while January to February 2024 maturities traded from 11.00% to 14.00%.

The Central Bank of Sri Lanka (CBSL) is due to conduct a round of Treasury bond auctions today. The auctions will see a total offered amount of Rs. 160 billion.

For reference the previous round of treasury bond auctions conducted on the 28th of November recorded a robust outcome as the entire Rs. 45 billion on offer was fully subscribed at its 1st and 2nd phases. The 15 January 2027 maturity recorded a weighted average 14.48% and the 1 September 2028 maturity recorded a weighted average yield of 14.52%. A further Rs. 4.50 billion was raised on 1 January 2027 maturity at its direct issuance window as well.

The total secondary market Treasury bond/bill transacted volume for 8 December was Rs. 17.77 billion.

In money markets, the weighted average rates on overnight call money and Repo stood at 9.18% and 9.82% respectively while the net liquidity stood at a deficit of Rs. 26.26 billion yesterday.

The DOD (Domestic Operations Department) of Central Bank injected liquidity by way of an overnight Repo auction for Rs. 29.73 billion at the weighted average rates of 9.06%. An amount of Rs. 37.98 billion was withdrawn from Central Banks SLFR (Standard Lending Facility Rate) of 10.00% while an amount of Rs. 41.44 billion was deposited at its SDFR (Standard Deposit Facility Rate) of 9.00%.

Forex Market

In the Forex market, the USD/LKR rate on spot contracts closed the day weaker at Rs. 327.00/327.30 yesterday against its previous day’s closing level of Rs. 327.00/327.30.

The total USD/LKR traded volume for 8 December was $ 30.06 million.

(References: Central Bank of Sri Lanka, Bloomberg E-Bond trading platform, money broking companies)