Bond market turns positive

• Weekly auction goes undersubscribed
• Money market liquidity increases further

By Wealth Trust Securities

The bearish sentiment that prevailed in the bond market during the beginning of week end-ing 17 February, turned positive towards the latter part of the week, on news regarding IMF’s Extended Fund Facility (EFF) to Sri Lanka. However, the weekly Treasury bill auction was undersubscribed with the successful bids received being only Rs. 78.05 billion as against an offered amount of Rs. 85 billion.

The secondary bond market witnessed moderate activity during the early part of the week, with yields of the 15.01.25, 15.05.26 and two 2027’s (i.e., 01.05.27 and 15.09.27) maturities increasing to highs of 33.00%, 29.90% and 29.50% respectively, before once again dipping to lows of 32.50%, 29.80%, 29.20% and 29.15%, backed by renewed buying interest. The foreign holding in rupee bonds stood at Rs. 25.46 billion during week ending 16 February while the daily secondary market Treasury bond/bill transacted volumes during the first four trading days averaged Rs. 29.69 billion.

In money markets, the total outstanding liquidity deficit decreased further to Rs. 125.15 billion by the end of the week when compared against the previous week’s figure of Rs. 168.93 billion, while the CBSL’s holding of Government Securities was at Rs. 2,583.96 billion up from the previous week’s Rs. 2,551.15 billion. The weighted average rates of call money and repo transactions carried out during the week was 15.50% each.

USD/LKR

In the forex market, the middle rate for USD/LKR spot contracts was Rs. 361.92 as against the previous week’s closing level of Rs. 361.9226.

The daily USD/LKR average traded volume for the first four days of the week stood at $ 51.95 million. 

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