Bond market at a standstill ahead of auctions; yields guidance removed for bond auctions

By Wealth Trust Securities

The fresh trading week commenced on a dull note yesterday with limited trades witnessed only on the 15.01.23 and 01.09.23 maturities at levels of 7.20% and 7.90% respectively ahead of today’s bond auctions.

Today’s Treasury Bond auctions will have on offer an amount of Rs. 20 billion in total, consisting of Rs. 10 billion each of the 15.11.2023 maturity and the 15.05.2030 maturity. The maximum yield guidance or stipulated cut-off rate given for primary Treasury bond auctions was removed for the first time since its introduction in May 2020.  The weighted average yields at the bond auctions conducted on 13 September were 8.10% and 10.05% for the maturities of 15.06.2024 and 15.03.2031 respectively, while its cut-off rates were 8.10% and 10.10%. The second phase of the auction was opened for the undersubscribed 15.06.2024 maturity while a direct issuance window was opened for the fully subscribed 15.03.2031 maturity. 

The total secondary market Treasury bond/bill transacted volume for 24 September was Rs. 2.37 billion.   

In money markets, the net liquidity deficit reduced to Rs. 99.90 billion yesterday as an amount of Rs. 97.19 billion was deposited at Central Banks SDFR (Standard Deposit Facility Rate) of 5% against an amount of Rs. 197.09 billion withdrawn from Central Banks SLFR (Standard Deposit Facility Rate) of 6%. The weighted average rates on overnight call money and repo decreased marginally to 5.95% and 5.93% respectively.

USD/LKR   

The Forex market continued to remain inactive yesterday. The total USD/LKR traded volume for 24 September was $ 23 million.   

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