Bond yields increase ahead of weekly bill auction

By Wealth Trust Securities

The start of the trading week saw secondary bond market yields were seen increasing yesterday on the back of selling interest mainly on the 2019 (i.e. 15.01.19, 01.07.19 and 15.09.19) and 2021 (i.e. 01.03.21, 01.05.21 and 01.08.21) maturities to intraday highs of 9.08%, 9.24%, 9.25%, 9.35%, 9.54% and 9.60% respectively from its opening lows of 9.00%, 9.20%, 9.18%, 9.30%, 9.35% and 9.40%. 

In addition, a limited amount of activity was witnessed on the 2023, 2027 and 2030 maturities at levels of 9.40% to 9.53%, 9.85% and 10.00% to 10.02% as well. Meanwhile, in the secondary bill market, April to May 2018 and January to early February 2019 maturities were traded within the range of 7.72% to 7.87% and 8.90% to 8.91% respectively.

This was ahead of today’s weekly Treasury bill auction, where a total amount of Rs. 28 billion will be on offer consisting of Rs. 10 billion of the 182 day and Rs. 14.5 billion of the 364 day maturities. The 91 day maturity will make reappearance after a lapse of six weeks consisting of an amount of Rs. 3.5 billion as well. At last week’s auction, the weighted average on the 182 day bill declined by one basis point to 7.95% while weighted average on the 364 day remained steady at 8.90%.

The total secondary market Treasury bond/bill transacted volumes for 2 February 2018 was Rs. 9.62 billion.

In money markets, the overnight call money and repo rates averaged at 8.14% and 7.54% respectively as the net liquidity surplus stood at Rs. 13.50 billion yesterday. The Open Market Operations (OMO) Department of the Central Bank of Sri Lanka drained out an amount of Rs. 5.65 billion on an overnight basis by way of a repo auction at a weighted average of 7.26%.

Rupee loses further   

The USD/LKR rate on spot contracts depreciated further yesterday to close the day at levels of Rs. 154.60/70 against its previous day’s closing levels of Rs. 154.30/40 on the back of continued importer demand and buying interest by banks.

The total USD/LKR traded volume for 2 February 2018 was $ 61.70 million.

Some of the forward USD/LKR rates that prevailed in the market were one month - 155.35/50; three months - 157.10/30 and six months - 159.60/80.