History in the making as 364 day bill average dips below 5%

Thursday, 16 July 2020 02:37 - - {{hitsCtrl.values.hits}}

Bond yields decrease

By Wealth Trust Securities

The declining trend in the weekly Treasury bill weighted average continued at its auction held yesterday, with the 364 day bill dipping below 5.00% for the first time in history. The 364 day bill recorded a considerable decline of 41 basis points to 4.91% closely followed by the 91 day and 182 day maturities by 43 basis points each to 4.65% and 4.75% respectively. The exact offered amount of Rs. 29.5 billion was accepted at the auction as the bid to offer ratio increased to a three week high of 4: 1.

The expectation of the outcome of the weekly Treasury bill auction saw yields in the secondary bond market decrease once again yesterday as the liquid maturities of 15.12.22, 15.01.23, 15.09.24, 01.05.25, 01.02.26 and 15.10.27 dipped to lows of 5.37%, 5.45%, 6.08%, 6.30%, 6.42% and 6.62% respectively against its previous day’s closing levels of 5.42/50, 5.50/55, 6.17/18, 6.32/38, 6.52/58 and 6.65/70. However, profit taking at these levels curtailed any further downward movement with yields closing marginally higher. In addition, 2021s (i.e. 15.10.21 & 15.12.21), 01.10.22, 01.09.23, 2024s (i.e. 01.01.24, 15.03.24, 15.06.24 & 01.08.24) and 01.07.28 maturities traded at levels of 4.90% to 5.00%, 5.40%, 5.65% to 5.70%, 6.085% to 6.30% and 6.70% to 6.72% respectively. In the secondary bill market, January 2021 maturities were seen changing hands at levels of 4.72% to 4.75% subsequent to the auction results. The total secondary market Treasury bond/bill transacted volume for 14 July was Rs. 17.75 billion. In money markets, the high liquidity surplus of Rs.157.07 saw the overnight call money and repo rates remaining steady to average 4.53% and 4.56% respectively yesterday.

USD/LKR

In the Forex market, the USD/LKR rate spot contracts remained steady to close the day at levels of Rs. 185.80/90 yesterday subsequent to trading within the range of Rs. 185.80 to Rs. 185.85.

The total USD/LKR traded volume for 14 July was $ 80.26 million.

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