Sunday Sep 29, 2024
Sunday Sep 29, 2024
Monday, 5 August 2024 02:02 - - {{hitsCtrl.values.hits}}
By Wealth Trust Securities
At the Treasury bond auctions conducted last Tuesday (30), only Rs. 146.26 billion (73.13%) was raised out of the Rs. 200.00 billion total offered amount, despite total bids exceeding the offer by 1.72 times. The 15.02.28 maturity was fully subscribed and issued at a weighted average yield of 12.07%, above a pre-auction market rate of 11.85%/12.00%. The 15.10.30 maturity was undersubscribed but issued at an impressive weighted average rate of 12.55% against its pre-auction rate of 12.25%/12.40%. The 01.06.33 maturity, issued at 12.83%, aligned with pre-auction rate but also failed to raise the entire offered amount.
Meanwhile at last Wednesday’s weekly Treasury bill auction, weighted average yields remained unchanged following consecutive three weeks of declines. Accordingly, the rates were recorded at 9.14% for the 91-day tenor, 9.34% for the 182-day tenor, and 9.95% for the 364-day tenor. The auction went undersubscribed, with only 94.43% (Rs. 160.53 billion) of the Rs. 170.00 billion was raised, across the 1st and 2nd phases. Strong demand was observed on the shorter tenors, with 84% of the accepted bids attributable to the 91-day and 182-day tenors.
The secondary bond market commenced last week on a subdued note, with yields edging up further as market participants adopted a cautious approach due to the uncertainties stemming from the Treasury bond and bill auctions scheduled for the week and the upcoming Presidential election. Post-bond auction, the outcome resulted in increased activity, however rates continued to rise. This trend continued throughout the week on the back of moderate activity, despite a resurgence in buying interest towards the latter part of the week that curtailed rates from increasing further. In conclusion, by the end of the week, overall rates increased further from already elevated levels, resulting in a steepening and an upward shift in the T-bond section of the yield curve.
Accordingly, the yield on the 01.02.26 maturity was seen moving up from an intraweek low of 10.25% to a high of 10.40%. Trades were also observed on the other 2026 tenors with the 01.08.26 and 15.12.26 maturities changing hands at the elevated levels of 10.52% and 10.55%. Similarly, the 15.12.27 maturity was seen moving up from an intraweek low of 11.70% to a high of 11.85. The 15.02.28 maturity, which was seen trading at a low of 11.90% prior to Treasury bond auction, was seen changing hands at the elevated level of 12.10% towards the end of the week. The medium tenor 15.09.29 and 15.10.30 maturities were seen transacting at the rates of 12.25% to 12.30% and 12.75% to 12.80% respectively.
The Colombo Consumer Price Index (CCPI, Base: 2021=100) in July accelerated to 2.40% year-on-year, up from 1.70% in June while the foreign holding in rupee Treasuries for the week ending 1 August 2024, remained mostly unchanged at Rs. 51.97 billion.
The daily secondary market Treasury bond/bill transacted volumes for the first four days of the week averaged at Rs. 41.61 billion.
In money markets, the total outstanding liquidity surplus increased to Rs. 40.92 billion by the week ending 26 July from its previous week’s surplus of Rs. 36.96 billion. The Domestic Operations Department (DOD) of Central Bank injected liquidity during the week by way of overnight reverse repo auctions and a 7-day term reverse repo auction at weighted average rates of 8.46% to 8.84%. The weighted average interest rate on call money and repo ranged between 8.53% to 8.57% and 8.74% to 8.84% respectively. The Central Bank of Sri Lanka’s (CBSL) holding of Government Securities was registered at Rs. 2,575.62 billion on 2 August 2024 was unchanged from the previous week’s level.
Forex Market
In the Forex market, the USD/LKR rate on spot contracts was seen appreciating considerably during the week to close the week at Rs 301.95/302.00 against its previous week’s closing level of Rs. 303.10/303.20 and subsequent to trading at a high of Rs. 301.95 and a low of Rs. 303.20.
The daily USD/LKR average traded volume for the first four trading days of the week stood at $ 43.88 million.
(References: Central Bank of Sri Lanka, Bloomberg E-Bond trading platform, Money broking companies)
