Bond market activity increases as yields decrease

• 6 months and 1 year Treasury bill weighted averages continue to nosedive
• 6-month bill average below 20% for the first time in over to 14 months

By Wealth Trust Securities Ltd 

The 6 months and 1 year Treasury bill weighted averages continued to freefall at its weekly auction yesterday, with the 6 months dipping below 20% for the first time since 06 April 2022. The decrease on the 6 months was 112 basis points (1.12%) to 19.49% followed by the 1-year bill by 109 basis points to 17.14%. The 91-day bill dipped by 16 basis points to 23%.

The total offered volume of Rs.110 billion was fully accepted at the auction while the 2nd phase of the auction will be opened on all three maturities at its weighted average rates until close of business of the day prior to settlement (i.e., 4.00 pm on 22.06.23).

 Meanwhile, activity in secondary bonds market increased yesterday as yields on the liquid 01.07.25 and 2027’s (i.e., 01.05.27 & 15.09.27) maturities were seen dipping to intraday lows of 26.47%, 22.82% and 22.75% respectively against its previous days closing level of 27.00/15, 23.00/20 and 22.95/05. In addition, maturities of 15.05.26 and 15.01.28 changed hands at levels of 24.75% and 22.00% as well.

The total secondary market Treasury bond/bill transacted volume for 20th June 2023 was Rs.8.2 billion.

In money markets, the DOD (Domestic Operations Department) of Central Bank injected liquidity by way of overnight and 7-day reverse repo auctions for a total volume of Rs. 111.40 billion at weighted average rates of 13.52% and 14% respectively while an amount of Rs. 67.33 billion was withdrawn from Central Banks SLFR (Standard Lending Facility Rate) of 14%. The weighted average rates on overnight call money and repo were registered at 13.64% and 14% respectively.

Forex Market 

In the Forex market, the USD/LKR rate on spot contracts traded within the range of Rs. 306.75 to Rs. 307.75 yesterday before closing the day broadly steady at Rs. 306.50/307.25.

The total USD/LKR traded volume for 20 June was $ 30.20 million.  

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