Bond yields increase once again ahead of weekly bill auctions

By Wealth Trust Securities

The meltdown in global financial markets on Monday was seen spilling over to the domestic equity and bond market as well at the start of a shortened trading week yesterday. 

Foreign selling interest saw yields increasing considerably across the yield curve on the back of an active market. The maturities of 2021s (i.e. 1.8.21 and 15.12.21), 2023s (i.e. 15.5.23 and 15.07.23), 2024s (i.e. 15.6.24, 15.9.24 and 1.8.24), 15.3.25 and 1.5.29 saw its yields increase to daily highs of 8.95% each, 9.42%, 9.60%, 9.61%, 9.75%, 9.78%, 9.90% and 10.22% respectively against its previous day’s closing levels of 8.50/65, each, 9.15/25, 9.20/28, 9.42/47, 9.42/48, 9.48/58, 9.50/60 and 9.65/85. 

Today’s weekly bill auction will have in total an amount of Rs. 32 billion on offer consisting of Rs. 9, Rs. 7 and Rs. 16 billion on the 91 day, 182 day and 364 day maturities respectively. At last week’s auction, weighted averages dipped across all three maturities to record 7.41%, 7.99% and 8.46% respectively. In secondary bills, the 5 February 2021 maturity changed hands at levels of 8.40%.

The total secondary market Treasury bond/bill transacted volume for 6 March was Rs. 6.63 billion.  

In money markets, overnight call money and repo rates averaged 7.00% and 7.03% respectively as the overnight net liquidity surplus in the system increased further to Rs. 38.57 billion yesterday. The Domestic Operations Department (DOD) of the Central Bank of Sri Lanka refrained from conducting any auction yesterday.

 Rupee dips to Rs. 182.58

 In the Forex market, the USD/LKR rate on spot contracts depreciated to a low of Rs. 182.58 yesterday before closing at a level of Rs. 182.55/65 against its previous day’s closing level of Rs. 181.85/00.

The total USD/LKR traded volume for 6 March was $ 74.25 million.

Some of the forward USD/LKR rates that prevailed in the market were one month - 183.05/25; three months - 184.00/30 and six months - 185.50/80.