Bond auctions undersubscribed

• Bond yields increase ahead of weekly bill auction

By Wealth Trust Securities

The two Treasury bond auctions conducted yesterday were undersubscribed at its 1st and 2nd phases as only an amount of Rs. 32.69 billion or 43.58% was accepted in total against a total offered amount of Rs. 75 billion. The two maturities of 15.11.2022 and 01.03.2026 recorded weighted averages of 5.65% and 6.59% respectively. 

The upward momentum in secondary market bond yields persisted yesterday on the back of continued selling interest, mainly on the liquid maturities of 01.09.23, 01.05.25, 01.02.26 and 15.10.27 as its yields hit highs of 5.90%, 6.58%, 6.70% and 7.06% respectively against its previous day’s closing level of  5.82/92, 6.43/50, 6.63/68 and 6.95/05. 

Furthermore, activity was witnessed on the 2021 maturities (i.e. 01.08.21 & 15.10.21) and 15.11.22 maturity at levels of 4.88% to 4.95% and 5.63% to 5.65% respectively. 

Today’s Treasury bill auction will have on offer a total amount of Rs. 40 billion, consisting of Rs. 8 billion of the 91 day maturity and Rs.16 billion each of the 182 day and the 364 day maturities. 

At last week’s auction, the weighted average rates on all three maturities remained steady at 4.51%, 4.64% and 4.88% respectively while the total accepted amount was seen falling short of the total offered amount. The Stipulated cut off rates for the maturities as published are 4.51%, 4.64% and 4.89% respectively. 

In secondary bills, 23 October 2020 and 23 July 2021 maturities changed hands at levels of 4.55% and 4.70% respectively. 

The total secondary market Treasury bond/bill transacted volumes for 25 September was Rs.3.6 billion.   

In the money market, the overnight net liquidity surplus of Rs.171.42 billion saw the weighted average rates of overnight call money and Repos been recorded at 4.53% and 4.57% respectively yesterday. 

Furthermore, the DOD (Domestic Operations Department) of Central Bank injected an amount of Rs. 7 billion by way of a 14 day reverse repo auction at a weighted average rate of 4.54%, subsequent to offering Rs. 15 billion. 

LKR remains mostly unchanged 

In the Forex market, USD/LKR rate on spot contracts was seen trading within the range of Rs. 185.25 to Rs.185.33 yesterday before closing the day mostly unchanged at Rs. 185.28/32. 

The total USD/LKR traded volume for 25th September was $ 70.02 million.   

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