Demand flows back to 2023 maturities

• Weekly auction sees improved appetite
• Money market liquidity improves considerably

By Wealth Trust Securities

An upsurge in demand for the shorter tenure 2023 maturities was witnessed in the secondary bond market during the week ending 6 August 2021, while yields on the rest of the yield curve remained mostly unchanged. The positive momentum was further supported by the weekly Treasury bill auction results, where the subscription level was seen increasing to a high of 87.03% of its total offered amount.

Trading activity centered on the liquid maturity of 15.11.23 as its yield was seen decreasing during the week to a weekly low of 6.30% against its previous weeks closing level of 6.35/40. In addition, yields on the maturities of 15.01.23, 15.03.23, 15.07.23, 01.09.23, 01.10.23 and 15.12.23 too dipped to lows of 5.72%, 5.95%, 6.01%, 6.10%, 6.20% and 6.35% respectively. In the meantime, 2022 maturities (i.e. 01.10.22, 15.11.22 & 15.12.22) changed hands at levels of 5.65% to 5.70% while 2024’s (i.e. 15.09.24 and 01.12.24) traded at levels of 6.85% to 6.93%. The 15.10.25 maturity traded at levels of 7.24% to 7.27% as well. In secondary market bills, renewed buying interest for very short maturities of September and October 2021 saw it change hands at levels of 5.13% to 5.16%.

The foreign holding in rupee bonds reduced to Rs. 2.087 billion recording an outflow of 0.405 billion for the week ending 4 August 2021, while the daily secondary market Treasury bond/bill transacted volumes for the first four trading days of the week averaged Rs. 12.39 billion.  

In money markets, the total outstanding liquidity surplus increased considerably to Rs. 48.32 billion by the end of the week from its previous week’s Rs. 8.72 billion. This inter saw the weighted average rates on overnight call money and repo decreasing marginally to average 5.08% and 5.13% respectively for the week against its previous week’s 5.11% and 5.14%. The CBSL’s holding of Government Securities increased further to Rs. 1,186.95 billion from its previous week’s Rs. 1,141.05 billion.

USD/LKR

The Forex market continued to remain inactive during the week.

The daily USD/LKR average traded volume for the first four trading days of the week stood at $ 21.11 million.  

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