Bond yields crash during the week

Monday, 22 May 2023 00:10 - - {{hitsCtrl.values.hits}}

Weekly weighted averages decrease across the board
Persistent foreign demand for rupee securities
Rupee continues to appreciate

By Wealth Trust Securities

The positive momentum which commenced in the secondary bond market during the latter part of the previous week continued during the week ending 19 May as well as yields were seen decreasing considerably in comparison to its previous week’s closing levels.

The activity was mainly seen following the weekly primary auction outcome and on the maturities of 15.05.26 and two 2027’s (i.e., 01.05.27 and 15.09.27) as its yields were seen decreasing to intraweek lows of 27.50%, 26.97% and 26.40% respectively against its previous weeks closing level of 29.25/00, 28.20/40 and 28.15/25. In addition, maturities of 01.07.25, 15.07.29 and 01.07.32 traded at lows of 29.20%, 24.10% and 22.50% respectively as well.

At the weekly bill auction, the weighted average rates decreased across the board for the first time in six weeks while an all-time high offered amount of Rs. 180 billion was fully subscribed at the 1st phase of the auction. Further an amount of Rs. 21.29 billion was raised at its phase II.

The foreign holding in rupee bills and bonds was seen increasing for a 14th consecutive week to record an inflow of Rs. 19.76 billion for the week ending 18 May 2023 while the daily secondary market Treasury bond/bill transacted volumes for the first four trading days of the week averaged Rs. 27.97 billion.

In money markets, the total outstanding liquidity deficit decreased during the week to Rs. 2.44 billion by the end of the week against its previous weeks Rs. 57.59 billion while CBSL’s holding of Gov. Security’s stood at Rs. 2,684.01 billion against its previous weeks of Rs. 2,602.74 billion.

USD/LKR

In the Forex market, the USD/LKR rate on spot contacts was seen appreciating during the week to close the week at Rs. 306.50/307.00 against its previous weeks closing levels of Rs. 312.90/313.40 subsequent to fluctuating within a high of Rs. 305.00 and a low of Rs. 313.00 during the week.

The daily USD/LKR average traded volume for the first four trading days of the week stood at $ 80.34 million.

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