Bond yields decrease further ahead of weekly bill auction

• Rupee hits a high of Rs. 184.10 

By Wealth Trust Securities

The positive momentum in the secondary bond market continued yesterday as yields was seen decreasing further on the back of continued buying interest. The liquid 2022s (i.e. 15.11.22 & 15.12.22), 2023s (i.e. 15.01.23 & 01.09.23), 15.09.24, 01.05.25 and 15.05.30 maturities saw its yields dip to 5.75%, 5.78%, 5.80%, 6.00%, 6.25%, 6.43% and 7.30% respectively against its previous day’s closing levels of 5.80/86, 5.85/92, 5.87/95, 6.10/13, 6.27/32, 6.55/60 and 7.30/40. 

In addition, 01.06.26 and two 2027s (i.e. 15.08.27 & 15.10.27) were seen changing hands at levels of 6.75%, 7.05% and 7.09% respectively while on the very short end of the yield curve, 15.12.21 maturity changed hands at 5.20% as well.

Today’s auction will have on offer a total amount of Rs. 36.5 billion, consisting of Rs. 8 billion of the 91 day, Rs. 12.5 billion of the 182 day and Rs. 16 billion of the 364 day maturities. At last week’s auction, weighted average rates increased across the board by 08 basis points each to 4.67%, 4.76% and 4.94% respectively while the same rates were announced as stipulated cut off rates for today’s auction. 

In secondary bills, October 2020 and January 2021 maturities were seen changing hands at 4.66% to 4.71% and 4.78% respectively.  The total secondary market Treasury bond/bill transacted volumes for 10 August was Rs 10.42 billion.   In money markets, overnight call money and repo rates recorded weighted averages of 4.53% and 4.54% respectively as the overnight surplus liquidity in the system stood at a high of Rs. 179.39 billion yesterday. 

Rupee appreciates sharply

The continued selling interest on spot and forward contracts by banks saw the USD-LKR rate on spot contracts continue its appreciating trend to hit an intraday high of Rs. 184.10 yesterday. It was seen closing the day at Rs. 184.05/15 against its previous day’s closing level of Rs. 184.70/77. The total USD-LKR traded volume for 10 August was $ 99.00 million.  

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