Domestic Operations Dept. buys bonds

• 91-day Treasury bill weighted average drops by 63 B.P.
• Bond yields dip sharply

By Wealth Trust Securities

The Domestic Operations Department (DOD) of the Central Bank of Sri Lanka was seen infusing liquidity by way of outright purchases of Treasury bonds for the first time since February 2020.

Against a total buy back amount of Rs. 40 billion on two 2025 maturities, it infused amounts of Rs. 3.7 billion and Rs. 0.50 billion on the maturities of 15.01.25 and 01.06.25 respectively at weighted averages of 30.80% and 29.00%, valued today.

The declining trend in weighted averages at the weekly Treasury bill auctions, continued yesterday as well, with the 91-day bill dipping by 63 basis points to 32.01%. The 182-day bill recorded a decline of 18 basis points to 32.02% closely followed by the 364-day bill by 11 basis points to 29.16%.

The exact offered amount of Rs. 98 billion was accepted at the auction as the bid to offer ratio increased to a 24-week high of 2.66: 1. Phase II of the auction will be opened on all three maturities, until close of business on 5 January by 3:30 p.m.

The outcome of the auctions saw yields in the secondary bond market dip sharply yesterday. The liquid maturities of 01.05.24 and 15.01.25 dipped to lows of 32.50% and 30.75% respectively against its opening highs of 33.10% and 32.90% respectively.

The total secondary market Treasury bond/bill transacted volume for 3 January was Rs. 6.81 billion.   

In money markets, the net liquidity deficit stood at Rs. 203.70 billion yesterday as an amount of Rs. 349.22 billion was deposited with Central Banks at its SDFR facility (Standard Deposit Facility Rate) of 14.50% against Rs. 552.92 billion being withdrawn from Central Banks SLFR facility (Standard Lending Facility Rate) of 15.50%. The weighted average rates on overnight call money and REPO stood at 15.50% each.

Forex market

In the forex market, the middle rate of USD/LKR spot contracts remained steady at Rs. 363.11.

The total USD/LKR traded volume for 3 January was $ 79.90 million.  

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