Bond market activity continues to centre on 2023 maturities 

• Primary auctions produce robust outcomes
• Weekly auction offered volumes at all-time-high levels
• Money market liquidity decreases

By Wealth Trust Securities

The yields on the active 2023 bond maturities were seen fluctuating during the week ending 16 July 2021, before closing marginally lower on a week on week basis. Selling interest prior to the primary T-bond auctions saw yield increase on the liquid 15.11.23 maturity to an intraweek high of 6.35% against its previous weeks closing level of 6.25/35. However, renewed buying interest subsequent to the outcome of the bond auctions saw yield decrease once again with said maturity hitting a weekly low of 6.24%. In addition, maturities of 15.03.23, 15.05.23, 01.09.23 and 01.10.23 were seen changing hands at levels of 5.88% to 5.89%, 5.95% to 6.00%, 6.10% to 6.16% and 6.15%, respectively, as well while 15.11.22, 15.12.22, 15.09.24 and 01.12.24 traded at levels of 5.69%, 5.68% to 5.70%, 6.65% and 6.74%, respectively.

At the T-bond auctions, the total offered amount of Rs. 50 billion was successfully taken up at its first phase while recording impressive weighted averages of 6.36% and 8.04% on the maturities of 15.11.23 and 01.07.28, respectively, against its stipulated cut off rates of 6.40% and 8.06%. An all-time high offered volume of Rs. 56 billion was fully taken up at the weekly Treasury bill auction while the weighted average rates increased across the board by 2, 3 and 1 basis points on the 91-day, 182-day and 364-day maturities, respectively, to 5.21%, 5.22% and 5.24%.

Furthermore, the weekly Treasury bill auction for the week ending 23 July will be conducted today, due to the shortened trading week. 

The total offered volume will hit a new all-time high of Rs. 64 billion, eclipsing its previous week’s figure of Rs. 56 billion. This will be consist of Rs. 24 billion on the 91-day maturity and Rs. 20 billion each on the 182-day and the 364-day maturities. The stipulated cut off rate on the 364-day maturity was moved up to 5.26% while the maximum yield rates of the 91-day and 182-day maturities will be decided below the level of the 364-day maturity at the auction.

The foreign holding in rupee bonds remained steady at Rs. 2.49 billion for the week ending 14th July 2021 while the daily secondary market Treasury bond/bill transacted volumes for the first four trading days of the week averaged Rs. 16.73 billion. 

In money markets, the total outstanding liquidity surplus decreased Rs. 61.77 billion by the end of the week from its previous weeks Rs. 85.17 billion. The weighted average rates on overnight call money and repos averaged 4.98% and 4.99%, respectively, for the week against its previous weeks of 4.94% and 4.96%. The CBSL’s holding of government securities decreased further to Rs. 911.44 billion from its previous weeks Rs. 917.05 billion.

USD/LKR

The forex market continued to remain inactive during the week.

The daily USD/LKR average traded volume for the first four trading days of the week stood at $ 87.48 million. 

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