Bond yields dip on moderate volumes ahead of weekly bill auction

By Wealth Trust Securities

The secondary market bond yields were seen declining once again yesterday on the back of moderate foreign and local buying interest. 

The yields on the liquid maturities of the two 2021’s (i.e. 01.03.21 and 01.05.21), the two 2026’s (i.e. 01.06.26 and 01.08.26) and the 15.06.27 were seen dipping to intraday lows of 9.20%, 9.22%, 9.58% each and 9.60% against its previous days closings of 9.25/30, 9.27/33, 9.68/75, 9.67/71 and 9.68/75.

At today’s auction, a total amount of Rs. 22.5 billion will be on offer consisting of Rs. 9 billion and Rs. 13.5 billion on the 182 day and 364 day maturities respectively, while the 91 day maturity will not be on offer for a third consecutive week. At last week’s auction, the weighted average yield of the 364 day bill remained steady for the first time in six weeks at 8.90% while the 182 day maturity decreased by six basis points to 8.24%.

The total secondary market Treasury bond/bill transacted volumes for 8 January 2018 was Rs. 9.30 billion.

In money markets, the Central Bank’s Open Market Operations (OMO) Department continued to drain out liquidity on a term basis as it was seen mopping up Rs. 20.7 billion for three and nine days at weighted averages of 7.28% and 7.49% through repo auctions. 

Furthermore, the OMO Department drained out an amount of Rs. 21.00 billion on an overnight basis by way of a repo auction at a weighted average of 7.25% as the net surplus liquidity in the system stood at Rs. 57.63 billion yesterday. The overnight call money and repo rates averaged 8.12% and 7.56% respectively.

Rupee appreciates marginally

The USD/LKR rate on spot contracts appreciated marginally yesterday to close the day at Rs.153.75/80 against its previous day’s closing levels of Rs. 153.80/85 on the back of inward remittances and foreign buying in rupee bonds.

The total USD/LKR traded volume for 8 January 2017 was $ 22.75 million.

Some of forward USD/LKR rates that prevailed in the market were one month - 154.55/75; three months - 156.25/45 and six months - 158.60/80.