Wednesday Jan 15, 2025
Wednesday Jan 15, 2025
Monday, 6 January 2025 04:05 - - {{hitsCtrl.values.hits}}
By Wealth Trust Securities
The secondary bond market began the week with subdued activity and low transaction volumes, as yields remained relatively stable. However, towards the end of the week, yields edged higher, accompanied by increased activity, driven primarily by profit-taking pressure on mid-2028 tenors.
Despite this, on a week-on-week basis two-way quotes were seen holding broadly steady and as such the T-bond section of the yield curve closed the week mostly unchanged.
The 2027 tenors of 15.09.27 and 15.10.27 were seen trading at the elevated rates of 9.81% to 9.85%. The 01.05.28 maturity and 15.10.28 maturities were seen trading at highs of 10.30% and 10.40% at the end of the week subsequent to hitting lows of 10.25% and 10.33% respectively midweek. The 15.09.29 traded up from an intraweek low of 10.68% midweek to a high of 10.75% at the close of the week. The 15.05.30 bond saw its yield remain relatively stable trading within the range of 11.03%-11.00% during the week.
At the weekly Treasury bill auction conducted last Wednesday (01/01/2025), the weighted average rates declined across all three maturities for the fourth consecutive week. As such rates were seen continuing on a downward trajectory with a reduction in yields observed on at least one tenor over the last eight weeks. Accordingly, the weighted average rates on the 91-day tenor dropped by 7 basis points to 8.55%, the 182-day tenor by 5 basis points to 8.72% and the 364-day tenor by 2 basis point to 8.94%. Total bids received exceeded the offered amount by 2.42 times, and the entire Rs 168.00 billion on offer was successfully raised at the first phase in competitive bidding.
The round of Treasury bond auctions conducted last Monday (30/12/2024) managed to successfully raise the entire offered amount of Rs. 80.00 billion. The total bids received exceeded the offered amount by 2.82 times. In particular, the 15.10.28 maturity (bearing an 11.00% coupon) recorded a resoundingly bullish outcome and was issued at a weighted average yield of 10.42%. Maturity-wise the entire Rs. 45.00 billion offered was snapped up at the 1st phase of subscription in competitive bidding. This maturity was traded at 10.45% prior to the auction.
A 01.06.33 maturity (bearing a 09.00% coupon) was issued at a weighted average yield of 11.47%. Incidentally this was the same rate it was issued at the immediately previous auction held on 12 December. However, this maturity raised only 33.23% or Rs. 11.63 billion at the first phase in competitive bidding. This prompted the opening of a second phase which saw the entire maturity-wise offered amount of Rs. 35.00 billion raised.
On the inflation front, the Colombo Consumer Price Index – CCPI (Base: 2021=100) for the month of December 2024 was recorded at -1.70% on a year-on-year basis as against -2.10% recorded in November 2024. This marked the fourth consecutive month that the index had recorded negative inflation.
For the week ending 2 January 2025, the foreign holdings in Sri Lankan rupee-denominated Treasury securities saw a net outflow amounting to Rs. 737.00 million. As a result, total foreign holdings were seen decreasing to Rs 68.53 billion.
The daily secondary market Treasury bond/bill transacted volumes for the first four days of the week averaged at Rs. 23.55 billion.
In money markets, the total outstanding liquidity surplus decreased to Rs. 140.156 billion as at the week ending January 3rd, from Rs. 148.27 billion recorded the previous week. The Domestic Operations Department (DOD) of the Central Bank injected liquidity during the week by way of a seven-day term reverse repo auction at the weighted average rate of 8.15%. The weighted average interest rate on call money and repo ranged between 7.99% to 8.00% and 8.07% to 8.13% respectively.
The Central Bank of Sri Lanka’s (CBSL) holding of Government Securities was registered at Rs. 2,515.62 billion as at 3 January 2025, unchanged from the previous week’s level.
forex market
In the forex market, the USD/LKR rate on spot contracts was seen depreciating, to close the week at Rs. 293.95/294.15 as against its previous week’s closing level of Rs. 292.40/292.70 and subsequent to trading at a high of Rs. 292.50 and a low of Rs. 294.20.
The daily USD/LKR average traded volume for the first three trading days of the week stood at $ 71.59 million.
(References: Central Bank of Sri Lanka, Bloomberg E-Bond trading platform, Money broking companies)
