Bond market activity moderate ahead of Monetary Policy

•  All time high volume on offer at weekly Treasury bill auction

By Wealth Trust Securities

The activity levels in the secondary bond market remained moderated yesterday, as limited trades were witnessed on the liquid maturities of 01.05.24, 15.05.26 and 15.09.27 at levels of 31.10% to 31.25%, 28.75% and 28.55% to 28.70% respectively.

This was ahead of the 1st monitory policy announcement for the year 2023 due today at 7.30 am. The monetary board of the Central Bank of Sri Lanka kept policy rates unchanged at 14.50% and 15.50% on its Standing Deposit Facility Rate (SDFR) and Standing Lending Facility Rate (SLFR) respectively at its previous announcement on the 24 November 2022.

Meanwhile, the weekly Treasury bill auction due today will see an all-time high volume of Rs. 120 billion on offer, consisting of Rs. 60 billion on the 91-day maturity, Rs. 30 billion each on the 182-day and the 364-day maturities while the week on week increase on the total offered amount is Rs. 25 billion.

At last week’s auction, the total offered amount of Rs. 95 billion was accepted at the 1st phase of the auction while a further amount of Rs. 23.75 billion was raised at its phase II from total bids of Rs. 194.77 billion and Rs. 37.96 billion received respectively. 

The 182-day bill weighted average tumbled by 230 basis points to 29.07% while the weighted averages on the 91-day and 364-day maturities dipped by 107 and 79 basis points respectively to 30.08% and 28.25%.

The total secondary market Treasury bond/bill transacted volume for 23rd January 2023 was Rs. 7.18 billion.   

In money markets, the overnight net liquidity surplus increased to Rs. 40.43 billion yesterday as an amount of Rs. 195.81 billion was deposited at Central Banks SDFR (Standard Deposit Facility Rate) of 14.50% against an amount of Rs. 155.38 billion withdrawn from Central Banks SLFR (Standard Lending Facility Rate) of 15.50%. 

The weighted average rates on overnight call money and repo stood at 15.36% and 15.50% respectively.

Forex Market 

In the Forex market, the middle rate for USD/LKR spot contracts remained steady at Rs. 362.16 yesterday.

The total USD/LKR traded volume for 23rd January was $ 22.70 million.  

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