Bond yields decrease ahead of Treasury bond auctions

By Wealth Trust Securities

The fresh trading week commenced with secondary market bond yields decreasing following the policy rate cut, on the back of an active market. Buying interest on the liquid maturities of 01.10.22, 15.01.23, 2024s (i.e.15.06.24 and 15.09.24), 01.05.25 and 15.10.27 saw its yields dip to intraday lows of 7.72%, 7.90%, 8.50%, 8.45%, 8.50% and 8.75% respectively.

However, selling interest at these levels due to profit taking saw yields edge up marginally once again, trimming its decline. Furthermore, limited amount of activity was witnessed on the maturities of 01.08.21, 15.03.22, 2023s (i.e. 15.03.23 and 01.09.23) and 15.03.24 at levels of 7.10%, 7.50%, 8.05%, 8.15 and 8.50% respectively. In secondary bills, an April 2021 maturity traded at 6.94%.

This was ahead of today’s Treasury bond auctions, where an total amount of Rs.50 billion will be on offer, consisting of Rs. 30 billion on a 2 year and 8 months maturity of 15.01.2023 and Rs.20 billion on a 8 year and 2 months maturity of 01.07.2028. The weighted average yields at the auctions conducted on 29 April for the maturities of 15.01.23, 01.05.25 and 15.10.2027 were recorded at 8.14%, 8.75% and 8.88% respectively.

In money markets, the base rate change saw overnight call money and repo rates decreasing to average at 5.95% and 6.08% respectively yesterday against its previous day of 6.41% and 6.54%. The DOD (Domestic Operations Department) of Central Bank was seen injecting an amount of Rs.3.8 billion by way of a seven-day reverse repo auction at a weighted average rate of 6.03%, subsequent to offering Rs.10 billion.  It further injected an amount of Rs.1.00 billion for Standalone Primary Dealers by way of a seven-day reverse repo auction at a weighted average rate of 6.30%, subsequent to offering Rs. 5 billion. The overnight liquidity surplus decreased to Rs.136.03 billion yesterday.

Rupee trades within a narrow range

 In the Forex market, the USD/LKR rate on spot contracts traded within a narrow range of Rs. 188 to Rs.188.50 yesterday.

The total USD/LKR traded volume for the 6 April was $ 81.50 million.  

(References: Central Bank of Sri Lanka, Bloomberg e-bond trading platform, money broking companies)