Launch of dollar sovereign bond leads to yields decreasing further

By Wealth Trust Securities

The trading week commenced with the launch of Sri Lanka’s second dollar denominated sovereign bond issues for the year for tenures of five and 10 years, which led to rupee-denominated bond yields decreasing further yesterday across its yield curve.

The yields on the liquid maturities of two 2021’s (i.e. 15.10.21 & 15.12.21), 01.10.22, 15.03.23, 15.03.24, 01.08.26, two 2027’s (i.e. 15.01.27 & 15.06.27) and 01.05.29 were seen dipping to intraday lows of 9.35%, 9.45%, 9.74%, 9.85%, 9.97%, 10.25%, 10.30%, 10.35% and 10.45% respectively against its previous day’s closing levels of  9.46/50, 9.50/60, 9.85/95, 9.87/93, 10.05/09, 10.26/32, 10.35/43, 10.40/50 and 10.50/60. 

In addition, the maturities of 2021’s (i.e. 01.03.21, 01.05.21 and 01.08.21), two 2023’s (i.e. 15.05.23 and 15.07.23) and 15.10.25 traded at levels of 9.30% to 9.38%, 9.90% to 9.95% and 10.15% to 10.17% as well. However, selling interest at these levels on the back of profit taking curtailed any further downward movement.

The total secondary market Treasury bond/bill transacted volumes for 21 June was Rs. 18.45 billion. In the money market, the overnight call money and repo rates averaged at 7.95% and 7.96% respectively as the net liquidity surplus in the system stood at Rs. 20.339 billion yesterday. The OMO Department of the Central Bank of Sri Lanka drained out total an amount of Rs. 10 billion by way of an overnight repo auction at a weighted average of 7.72%.

Rupee appreciates   

The USD/LKR rate on spot contracts appreciated yesterday to close the day at levels of Rs. 176.50/55 against its previous day’s closing levels of Rs. 176.70/80 on the back of selling interest by banks and export conversions.

The total USD/LKR traded volume for 21 June was $ 46.19 million.

Some of the forward USD/LKR rates that prevailed in the market were 1 month – 177.15/30; 3 months – 178.65/75 and 6 months – 180.70/10.