Impressive outcome at the primary bond auctions

• Secondary market bond yields dip marginally ahead of Inflation

By Wealth Trust Securities

The Treasury bond auctions conducted yesterday recorded impressive outcomes as the weighted averages on the two-year maturity of 15.09.2019 and the 7.11 year maturity of 01.08.2025 logged 9.83% and 10.54% respectively with the exact offered amount of Rs.25.00 billion being accepted. The bid to offer ratio stood at 2.79:1.

In the secondary bond market yesterday, yields were seen decreasing mainly on the liquid maturities of 01.08.21, 15.05.23 and 01.08.25 to intraday lows of 10.27%, 10.40% and 10.48% respectively against its opening highs of 10.30%, 10.48% and 10.65% in morning hours of trading. 

In addition, on the long end of the yield curve, the 01.09.28 and 15.05.30 maturities were seen changing hands at levels of 10.85% to 10.91% and 10.90% respectively. However, the downward trend in yields came to halt subsequent to the outcome of the auctions as two way quotes increased and widened. 

The total secondary market Treasury bond/bill transacted volumes for 29 August was Rs.7.81 billion.

Meanwhile in money markets, the Open Market Operations (OMO) Department of Central Bank drained out an amount of Rs.25.73 billion on an overnight basis at a weighted average of 7.27% as the net surplus liquidity in the system remained high at Rs.42.05 billion. The overnight call money and repo rates averaged at 8.27% and 8.25% respectively.

Rupee trades 

within a narrow span 

The USD/LKR rate on spot contracts was seen trading within a narrow span of Rs.152.80 to Rs.152.90 yesterday.

The total USD/LKR traded volume for 29 August was $ 121.31 million. 

Given are some forward USD/LKR rates that prevailed in the market: one month – 153.55/65; three months – 155.35/45; six months – 157.60/75.