Bond market active; yields dip further

• Rs. 175 b bill auction in focus
• Rupee dips marginally

By Wealth Trust Securities

The weekly Treasury bill auction due today will have in total an amount of Rs. 175 billion on offer, which will consist of Rs. 75 billion on the 91-day maturity, Rs. 65 billion on the 182-day maturity and a further Rs. 35 billion on the 364-day maturity.

For context, last week’s auction (held on 08.11.23) witnessed a bullish response as weighted average yields decreased across all three maturities. The 91-day and 182-day bills saw significant demand, leading to declines of 29 basis points and 12 basis points respectively to 15.64% and 14.81%. The 364-day bills also dipped below 13%, a level not seen since April 2022. A total amount of Rs. 190.17 billion taken up at the 1st and 2nd phases of the auction against a total offered amount of Rs. 145 billion.

The secondary bond market was active yesterday with yields edging down, predominantly on the medium tenures. Accordingly, trades were seen on the maturities of the 01.05.24, two 26’s (01.06.26 and 15.05.26), three 27’s (15.01.27, 01.05.27 and 15.09.27), two 28’s (01.05.28 and 01.07.28) within the ranges of 14.55% to 14.40%, 15.00% to 14.75%, 14.75% to 14.65%, 14.79% to 14.60% respectively.

The total secondary market Treasury bond/bill transacted volume for 13 November 2023 was Rs. 28.60 billion.

In money markets, the DOD (Domestic Operations Department) of Central Bank injected liquidity by way of an overnight reverse repo auction for Rs. 19.91 billion at a weighted average rate of 10.05%. Furthermore, an amount of Rs. 11.01 billion was withdrawn from Central Banks SLFR (Standard Lending Facility Rate) of 11.00% while an amount of Rs. 1.75 billion was deposited in the Central Banks SLDR (Standard Deposit Facility Rate) of 10.00%. The net market liquidity deficit stood at Rs. 29.16 billion yesterday.

The weighted average rates on overnight call money and repo were registered at 10.16% and 10.52% respectively.

Forex Market 

In the Forex market, the Rupee or USD/LKR rate on spot contracts depreciated, closing trading yesterday at Rs. 327.70/328.00 against its previous day’s closing level of Rs. 326.50/327.00.

The total USD/LKR traded volume for 13 November 2023 was $ 46.35 million.

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