Bond market bullish ahead of T-Bill auction

• Rupee appreciates

By WealthTrust Securities

The fresh trading week commenced on a positive note as activity in the secondary bond market increased yesterday with yields decreasing considerably. Yields on the liquid maturities of 01.07.25, 15.05.26 and two 2027’s (i.e.,01.05.27 & 15.09.27) decreased to intraday lows of 28.70%, 26.90%, 26.70% and 26.40% respectively against its previous day’s closing level of 29.80/30.10, 27.50/27.80 and 27.40/27.60 each.

Today’s weekly Treasury bill auction will have in total an amount of Rs. 110 billion on offer, a decrease of Rs. 10 billion from its previous weeks total offered amount. This will consist of Rs. 60 billion of the 91-day maturity and Rs. 30 billion of the 182-day maturity and further Rs. 20 billion of the 364-day maturity. At last week’s auction, weighted average rates decreased across the board by 24, 33 and 01 basis points respectively to 25.99%, 25.79% and 24.31%, recording its fifth consecutive week of declines. An amount of Rs. 86.74 billion was accepted at the first phase of the auction while a further amount of Rs. 5.8 billion was raised at its phase II.

This was ahead of the third monitory policy announcement for the year 2023 due today at 4.45 p.m. The Monetary Board of the Central Bank of Sri Lanka increased rates by 100 basis points each to 15.50% and 16.50% on its Standing Deposit Facility Rate (SDFR) and Standing Lending Facility Rate (SLFR) respectively at its previous announcement on 3 March 2023.

The total secondary market Treasury bond/bill transacted volume for 31 March 2023 was Rs. 26.10 billion.

In money markets, the weighted average rates of overnight call money and REPO stood at 16.50% each while an amount of Rs. 231.44 billion was withdrawn from the Central Banks SLFR (Standard Lending Facility Rate) at 16.50%.

Forex Market

In the Forex market, the USD/LKR spot contracts closed the day at Rs. 321.00/324.00 yesterday against its previous day’s closing level of Rs. 328.00/329.00. 

The total USD/LKR traded volume for 31 March was $ 56.90 million.

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