Bonds trade within narrow range ahead of weekly bill auction

By Wealth Trust Securities

The secondary bond market traded within a narrow range yesterday, ahead of today’s weekly Treasury bill auction, where the liquid maturities of 15.12.21, 15.03.25, and 01.08.26 were seen changing hands at levels of 11.25% to 11.30%, 11.70% to 11.80%, and 11.56% to 11.64%, respectively. 

Furthermore, activity was also witnessed consisting of the 01.05.20, three 2021’s (i.e. 01.03.21, 01.05.21, and 01.08.21), two 2022’s (i.e. 01.07.22 and 01.10.22), and the two 2023’s (i.e. 15.05.23 and 15.07.23) at levels of 10.85% to 10.95%, 11.10% to 11.30%, 11.40% to 11.45%, and 11.45% to 11.48%, respectively. 

This week’s bill auction will have on offer a total amount of Rs. 20 billion, consisting of Rs. 8 billion of the 182-day and Rs. 12 billion of the 364-day maturities. At the last auction, the 364-day weighted average decreased by 21 basis points to 10.99%, and the 182-day by 4 basis points to 9.95%.

The total secondary market Treasury bond/bills transacted volume for 7 January was Rs. 10.69 billion. 

In the money market, overnight call money and repo rates averaged 9% as the OMO Department of the Central Bank infused liquidity by way of an overnight and a seven-day term reverse repo auction for successful amounts of Rs. 22.3 billion and Rs. 25 billion, at weighted average yield of 9%. The net liquidity shortfall stood at Rs. 93.84 billion. 

Rupee losses 

In the Forex market, the USD/LKR rate on spot contracts depreciated yesterday to close the day at Rs. 182.55/70 against its previous day’s closing levels of Rs. 182.30/40 on the back importer demand.

The total USD/LKR traded volume for 7 January was $ 86.93 million. 

Some forward USD/LKR rates that prevailed in the market are 1 month – 183 50/90, 3 months – 185.20/60, and 6 months – 188.25/65. Closing, secondary market yields of the most frequently traded T-bills and bonds