Bond yields decrease subsequent to increasing ahead of weekly bill auction

By Wealth Trust Securities

The secondary market bond yields fluctuated yesterday, initially increasing in the morning hours of trading and then decreasing once again during the second half of the day on the back of renewed buying interest ahead of today’s Treasury bill auction. 

The liquid maturities of 01.07.25 and two 2027’s (i.e., 01.05.27 & 15.09.27) initially hit intraday highs of 29.00% and 27.25% each respectively before tumbling to lows of 28.10%, 26.70% and 26.45% respectively. In addition, 2024’s (i.e., 01.05.24 & 15.11.24) traded at levels of 28.00% as well.

Today’s weekly Treasury bill auction will have in total an amount of Rs. 115 billion on offer, an increase of Rs. 25 billion over its previous week. This will consist of Rs. 60 billion on the 91-day maturity, Rs. 20 billion on the 182-day maturity and a further Rs. 35 billion on the 364-day maturity.

At last week’s auction, weighted average rates increased across the board by 85, 87 and 32 basis points to 25.65%, 24.97% and 22.96% on the three maturities respectively. The total offered amount of Rs. 90.00 billion was accepted at the 1st phase of the auction while a further amount of Rs. 4.04 billion was raised in phase II.

The total secondary market Treasury bond/bill transacted volume for 24 April 2023 was Rs. 4.45 billion.

In money markets, The DOD (Domestic Operations Department) of the Central Bank injected liquidity by way of a 30-day reverse repo auction for a volume of Rs. 6.00 billion at a weighted average rate of 20.21%, valued today.

The net liquidity deficit stood at Rs. 169.96 billion yesterday as an amount of Rs. 7.32 billion was deposited at Central Banks SDFR (Standard Deposit Facility Rate) of 15.50% against an amount of Rs. 177.28 billion being withdrawn from Central Banks SLFR (Standard Lending Facility Rate) of 16.50%. The weighted average rates on overnight call money and REPO stood at 16.50% each.

Forex Market

In the Forex market, the USD/LKR rate on spot contracts was traded within the range of Rs. 321.80 to Rs. 321.90 yesterday before closing the day at Rs. 321.50/321.90.

The total USD/LKR traded volume for 24 April was $ 18.00 million.  

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