Bond market yields decrease ahead of T-bill auction; inflation spikes

By Wealth Trust Securities

The yields in the secondary bond market decreased yesterday on the back of renewed buying interest, mainly on the maturities of 15.03.24, 15.01.26 and 15.01.27 as its yields hit lows of 9.15%, 10.22% and 10.75% respectively against its previous day’s closing level of 9.15/19, 10.30/45 and 10.80/90. 

Furthermore, activity was witnessed on the 2023 maturities (i.e. 15.07.23 and 01.09.23) and 15.03.25 maturity at levels of 8.55%, 8.65% and 9.68% to 9.70% respectively. In secondary market bills, 21st January 2022 maturity changed hands at 7.10%.

This is ahead of today’s bill auction, where in total an amount of Rs. 60 billion will be on offer, consisting of Rs. 18 billion on the 91 day, Rs. 20 billion on the 182 day and Rs. 22 billion on the 364 day maturities. At last week’s auction, weighted average rates on all three maturities decreased for a third consecutive week to 7.53%, 8.02% and 8.16% respectively.

Meanwhile, the Colombo Consumer Price Index (CCPI - Base 2013=100) was seen increasing to its highest levels since its rebase in January 2015 to record 9.9% on its point to point for the month of November when compared against its previous month’s figures of 7.6% while its annual average increased as well to 5.3% from 4.8%.

The total secondary market Treasury bond/bill transacted volume for 29 November was Rs. 15.80 billion.   

In money markets, the net liquidity deficit increased to Rs. 220.30 billion yesterday as an amount of Rs. 368.43 billion was withdrawn from Central Banks SLFR of 6.00% against an amount of Rs. 98.67 billion deposited at Central Banks SLDR of 5.00%. 

The Domestic Operations Department (DOD) of the Central Bank of Sri Lanka was seen draining out amounts of Rs. 39.45 billion and Rs. 10.00 billion by way of overnight and 7 day repo auctions at weighted average rates of 5.98% and 5.99% respectively while the weighted average rates on overnight call money and repo was registered at 5.92% and 5.95% respectively.

USD/LKR   

In the Forex market, the overall market continued to remain inactive yesterday.

The total USD/LKR traded volume for 29 November was $ 35.85 million.   

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