Bond market remains inactive ahead of weekly Treasury bill auction

• Yields edge up in very thin trade
• Outright purchase auction by OMO for the first time in over one-and-a-half years

 By Wealth Trust Securities

The secondary bond market remained inactive yesterday ahead of today’s weekly Treasury bill auction. 

In very limited trades, yields were seen increasing on the maturities of 15.12.20, and 15.03.23 to intraday highs of 10.10% and 10.47% respectively against its previous day’s closing levels of 9.80/95 and 10.43/47. In the secondary bill market, May 2019 maturities changed hands at levels of 9.38% to 9.42%

At today’s Treasury bill auction, the total offered amount of Rs.15 billion will consist of Rs.3 billion on the 91day maturity, Rs.4 billion on the 182 day maturity and Rs.8 billion on the 364 day maturity. 

At last week’s auction, the weighted average on the 364 day maturity increased by 02 basis points to 9.39% while all bids received on the 91 day and 182 day bills were rejected.

The total volume of bonds transacted in the secondary market on 2 July was Rs.1.50 billion.

The Open Market Operations (OMO) department of Central Bank was seen conducting an outright auction to purchase Treasury bills from the market for the first time in over one and a half years yesterday. However, only an amount of Rs.0.06 billion was accepted in successful bids against a total offered amount of Rs.20 billion for durations ranging from 16 days to 37 days. 

The overnight call money and repo rates averaged at 8.49% and 8.45% respectively as the OMO was seen injecting an amount of Rs.38.24 billion on an overnight basis by way of a Reverse repo auction at a weighted average of 8.44% with a further amount of Rs.17.24 billion been drawn down from its Standing Lending Facility at 8.50%. The net liquidity shortage stood at Rs.35.67 billion yesterday.

Rupee loses further

The USD/LKR rate on spot contracts depreciated further to close the day at Rs.158.50/60 against its previous day’s closing levels of Rs.158.40/50 on the back of continued importer demand.

The total USD/LKR traded volume for 2 July was $ 67.50 million.

Some of the forward USD/LKR rates that prevailed in the market were: one month – 159.30/50; three months – 160.90/20; and six months – 163.40/70.