Saturday Sep 28, 2024
Saturday Sep 28, 2024
Monday, 25 September 2023 01:00 - - {{hitsCtrl.values.hits}}
By Wealth Trust Securities
The Central Bank of Sri Lanka (CBSL) announced a historically large Treasury bond auction due today (25), with a total offered amount of Rs. 220 billion.
This breaks the record of the previous highest total offered amount of Rs. 200 billion at an auction held on 28 August.
At the previous bond auctions conducted on 12 September, an amount of Rs. 108 billion was taken up in total against a total offered amount of Rs. 90 billion which included the additional 20% offered through the direct issuance window on both maturities. The weighted average rates were recorded at 15.58% and 14.64% on the 01.06.2026 and 01.05.2028 maturities respectively.
The weekly Treasury bill auction saw yields recording mixed results. The 91-day bill and 364-day bill respectively recorded marginal declines of 04 and 03 basis points, to record weighted averages of 18.12% and 13.32%. However, the 182-day bill saw its weighted average increasing by 19 basis points to 15.38%. The total offered amount of Rs. 170 billion at the 1st phase of the auction was successfully raised. Additionally, a further 11.00 million was raised at the second phase at the respective weighted average on the 364-day bill.
Meanwhile, the National Consumer Price Index – NCPI (Base: 2021=100) or National inflation for the month of August decreased sharply to 2.10% on its point to point as against 4.60% recorded in July and a peak of 53.6% in February of 2023. This is so far the lowest level witnessed in the NCPI since the index was rebased, at the start of the year 2023. As such inflation metrics continue to express rapidly cooling inflation on a steady disinflation path.
The foreign holding in Rupee bonds and bills recorded a further drop, making it two consecutive weeks of declines, with an outflow of Rs. 3.09 billion for the week. This brings the total T-bills and T-bonds held by foreigners to Rs. 159.50 billion for the week ending 21 September.
The secondary bond market witnessed moderate activity, with yields edging upwards towards the latter part of the week ending 22 September. The yields on the liquid maturities of 01.07.25, two 26’s (i.e. 01.06.26 and 01.08.26), and 01.05.28 hit intraweek highs of 15.25%, 15.15%, and 14.25% respectively against intraweek lows of 14.75%, 14.10%, and 13.45%. This resulted in the yield curve recording a shift up on a week-on-week basis.
The daily secondary market Treasury bond/bill transacted volumes for the first four days of the week averaged at Rs. 22.64 billion.
In money markets, the total outstanding liquidity recorded a deficit of Rs. 96.62 billion by the end of the week against its previous week’s surplus of Rs. 1.05 billion. The Domestic Operations Department (DOD) of Central Bank continued to inject liquidity during the week by way of overnight to 5/6-day Reverse repo auctions at weighted average yields ranging from 11.30% to 11.75%.
The Central Bank of Sri Lanka’s (CBSL) holding of Government Securities saw the conversion of Outstanding Credits of the Central Bank of Sri Lanka to the Government into negotiable debt instruments with Specified Maturities under the Domestic Debt Optimisation Program. Accordingly, as at 21 September, outstanding Provisional Advances from the CBSL to the Government and outstanding Treasury bills purchased by the CBSL in the primary market were converted into ten new step-down fixed coupon Treasury bonds and to 12 existing Treasury bills. As such following the DDO the CBSL holding of Government Securities closed the week at Rs. 2,839.35 billion against the previous week’s level of Rs. 2,571.92 billion.
In the forex market, the USD/LKR rate on spot contracts was seen depreciating marginally during the week to close the week at Rs. 324.50/325.00 against its previous week’s closing level of Rs. 323.25/323.75, subsequent to trading at a low of Rs. 325.00 and a high of Rs. 323.50.
The daily USD/LKR average traded volume for the first four trading days of the week stood at $ 98.08 million.
(References: Central Bank of Sri Lanka, Bloomberg E-Bond trading platform, Money broking companies)
