Bond yields broadly steady during the week ahead of Treasury bond auctions

By Wealth Trust Securities

The secondary market bond yields remained broadly steady during the week ending 25 May 2018, with moderate volumes changing hands.

This was ahead of the Treasury bond auctions due today, 28 May 2018, where a total amount of Rs. 90 billion will be on offer consisting of Rs. 50 billion on a 4 years and 9 month maturity of 15.03.2023 and Rs. 40 billion on a new 9 years and 9 month maturity of 15.03.2028. A Treasury bond maturity of Rs. 90.08 billion is due on 1 June 2018.

The week witnessed an limited amount of trades on the maturities of 15.03.23, 01.08.24, 01.08.26, 15.06.27 and 01.09.28 within the range of 10.39% to 10.50%, 10.51% to 10.55%, 10.60% to 10.62%, 10.66% to 10.67% and 10.67% to 10.78% respectively while on the short end of the yield curve, the 2018 and 2021 maturities were seen changing hands at levels of 8.53% to 9.00% and 10.00% to 10.20% respectively. On the long end of the curve, the 15.05.2030 maturity was seen trading within the range of 10.90% to 11.00% against its previous weeks closing level of 10.70/90.

The weighted averages on the 91 day, 182 day and 364 day bills increased by a further 04 basis points each and 03 basis points respectively at its weekly Treasury bill auction to 8.37%, 8.94% and 9.73% while the foreign holding in Rupee bonds decreased marginally to record an outflow of Rs. 0.45 billion for the week ending 23 May.

The daily secondary market Treasury bond/bill transacted volumes for the first four days of the week averaged Rs. 7.23 billion.

In money markets, the overnight call money and Repo rates remained broadly steady to average 7.93% and 7.92% respectively for the week as the average net surplus liquidity decreased to Rs. 2.93 billion against its previous week’s average of Rs. 3.68 billion. The Open Market Operations (OMO) Department of Central Bank drained out liquidity throughout the week on an overnight basis at a weighted average of 7.34% to 7.40%.

Rupee loses marginally

The USD/LKR rate on spot contracts was seen depreciating marginally during the week to close the week at Rs. 158.10/20 against its previous weeks closing levels of Rs. 157.80/00 subsequent to trading within the range of Rs. 157.87 to Rs. 158.15. The daily USD/LKR average traded volume for the first four days of the week stood at $ 70.58 million.

Some of the forward dollar rates that prevailed in the market were one month – 158.85/00; three months – 160.55/75 and six months – 162.85/05.