Bond market at standstill ahead of weekly bill auction

•  Two-way quotes on liquid bond maturities increase

By Wealth Trust Securities

The secondary bond market was at a complete standstill yesterday while two way quotes were seen increasing ahead of the weekly Treasury bill auction due today. In the secondary bill market, a trade was seen on 2 September maturity at 23.00%.

The Treasury bill auction will see a total volume of Rs. 85 billion on offer, an increase of Rs. 30 billion over its previous weeks total offered volume. This will consist of Rs. 37.5 billion on the 91 day maturity, Rs. 25 billion on the 182 day maturity and Rs. 12.5 billion on the 364 day maturity. 

At last week’s auction, weighted average rates decreased for the first time five weeks by 61, 104 and 5 basis points on the 91 day, 182 day and 364 day maturities respectively to 31.50%, 29.97% and 29.82%. The auction was fully subscribed at its phase I while a further amount of Rs. 13.75 billion was raised at its Phase II on the 182 day and 364 day maturities.

The total secondary market Treasury bond/bill transacted volume for 25 July was Rs. 5.16 billion.   

In money markets, the Domestic Operations Department (DOD) of the Central Bank of Sri Lanka conducted auctions for outright sales of Treasury bills for Rs. 5 billion each for periods of 37 days and 44 days. An amount of Rs. 2.25 billion was accepted from the 44 day maturity at a weighted average rate of 26.81% while all bids received were rejected on the 37 day maturity.

The net liquidity deficit decreased to Rs. 420.38 billion yesterday as an amount of Rs. 290.17 billion was deposited at Central Bank’s Standard Deposit Facility Rate (SDFR) of 14.50% against an amount of Rs. 710.54 billion withdrawn from Central Bank’s Standard Lending Facility Rate (SLFR) of 15.50%. The weighted average rate on overnight Call money and REPO stood at 15.50% each.

Forex market 

In the forex market, the middle rate for USD/LKR spot contracts was at Rs. 361.00 yesterday against its previous day’s closing level of Rs. 361.09.

The total USD/LKR traded volume for 25 July was $ 16.40 million.  

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