Historical Bill Auction sees yields dip

• Secondary Bond Market rally continues
• Rupee gains slightly

By Wealth Trust Securities

This week’s Treasury bill auction conducted yesterday, continued to receive a positive response as weighted average yields decreased across the board for a third consecutive week. The 91-day and 182-day tenors continued to see the most demand, which led to its weighted average yields declining by 8 basis points and 9 basis points respectively to 14.59% and 14.29%. It received bids of Rs. 132.74 billion and Rs. 139.99 billion respectively against offered amount of Rs. 70 billion and Rs. 75 billion. The 364-day bills also declined by 5 basis points to record a weighted average of 12.83%. The total bids received was 1.58 times greater than the total offered amount.

The historically high total offered amount of Rs. 220 billion was raised at the 1st phase of the auction. The 2nd phase of subscription, for only the 364-day maturity will be opened until 4 p.m. on the day before the settlement date (i.e., 14.12.2023) at the weighted averages determined at the 1st phase of the auction. Given below are the details of the 1st phase of the auction;

Meanwhile, the secondary bond market saw yields decline on the back of some aggressive buying interest, with considerable volumes being transacted. Activity continued to be centred on the short end of the yield curve. This was against the backdrop of the news that the IMF Board completed the first review under the 48-month Extended Fund Facility program with Sri Lanka, providing the country with access to a further SDR 254 million (about $ 337 million) to support its economic policies and reforms.

Accordingly, trades were observed on the following maturities of the three 26’s (15.05.26, 01.06.26, 01.06.25, 01.08.26), 15.09.27, two 28’ (01.05.28, 01.07.28, 15.12.28), and 15.05.30 within the ranges of 14.00% to 13.85%, 14.00%, 14.18% to 14.05% and 14.10% respectively.

Meanwhile, in secondary market bills January, March and June 2024 maturities were seen changing hands within the ranges of 13.10% to 13.00%, 14.40% to 14.25% and 14.19% to 14.15% respectively. 

The total secondary market Treasury bond/bill transacted volume for 12 December 2023 was Rs. 51.21 billion.

In money markets, the weighted average rates on overnight call money and Repo stood at 9.10% and 9.85% respectively while the net liquidity deficit stood at Rs. 38.32 billion yesterday.

The DOD (Domestic Operations Department) of Central Bank injected liquidity by way of an overnight auction for Rs. 22.92 billion at the weighted average rates of 9.06%. An amount of Rs. 20.44 billion was withdrawn from Central Banks SLFR (Standard Lending Facility Rate) of 10% while an amount of Rs. 13.94 billion was deposited at Central Banks SDFR (Standard Deposit Facility Rate) of 9%. 

Forex Market

In the Forex market, the USD/LKR rate on spot contracts closed the day at Rs. 326.70/326.80 against its previous day’s closing level of Rs. 326.90/327.00.

The total USD/LKR traded volume for 05 December was $ 55.85 million.

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