Bond yields increase marginally ahead of weekly Treasury bills auction

By Wealth Trust Securities

The short and fresh trading week commenced with secondary bond market yields increasing marginally on Monday on the back of average volumes changing hands which was driven by local selling interest. This resulted in yields on the liquid maturities of 2023’s (i.e. 15.03.23, 15.07.23 and 15.12.23), 2024’s (i.e. 15.06.24 and 15.09.24) and 15.10.27 increasing to intraday highs of 9.00%, 9.03%, 9.10%, 9.28% each and 9.54% respectively against its previous day’s closing levels of 8.90/00, 8.92/00, 8.98/05, 9.22/26 each and 9.40/45.  

In addition, maturities of 15.12.21 and 15.03.24 were seen changing hands at levels of 8.60% and 9.15% to 9.18% respectively as well. In the secondary bill market, May 2020, June 2020, November 2020 and January 2021 maturities traded at levels of 7.73%, 8.05%, 8.23% to 8.25% and 8.25% respectively. 

Today’s (Wednesday) weekly Treasury bill auction will have on offer a total amount of Rs. 30 billion consisting of Rs. 4 billion of the 91 day maturity, Rs. 8 billion of the 182 day maturity and Rs. 18 billion of the 364 day maturity. At last week’s auction, which was conducted prior to the policy rate cut, weighted average yields on the 91 day and 364 day maturities decreased by 04 and 02 basis points respectively to 7.51% and 8.59% while the weighted average yield on the 182 day bill remained steady at 8.15%. 

The total secondary market Treasury bond/bill transacted volume for 31 January 2020 was Rs. 22.67 billion. 

The Domestic Operations Department (DOD) of the Central Bank of Sri Lanka refrained from conducting any auctions on Monday as the overnight liquidity surplus stood at Rs. 23.21 billion. The overnight call money and Repo averaged 6.96% and 7.01% respectively. 

Rupee loses marginally 

The USD/LKR rate on spot contracts depreciated marginally on Monday to close the day at Rs. 181.48/52 against its previous day’s closing levels of Rs. 181.35/45, on the back of buying interest by Banks.

The total USD/LKR traded volume for 31 January 2020 was $ 59.70 million.

Some of the forward USD/LKR rates that prevailed in the market were one month – 181.95/10; three months – 182.95/15 and six months – 184.40/70.

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