• Auction undersubscribed
• Rs. 98 billion on offer at weekly bill auction

By Wealth Trust Securities 

The outcome at yesterday Treasury bond auctions was mixed as the weighted averages reflected a kink in the short-term yield curve while the auction went undersubscribed. 

The 1.5-year maturity of 01.05.2024 recorded a weighted average of 32.71% and the 2-year maturity of 15.01.2025 was 33.01% while the 3.5-year maturity of 15.05.2026 recorded a weighted average of 31.45%, well below the other two maturities. 

Only Rs. 109.89 billion was accepted in total against a total offered amount of Rs. 160 billion, leading to phase two of the auctions been opened for the 01.05.2024 and 15.01.2025 maturities as it was not fully taken up. 

However, the offered amount of Rs. 70 billion on the 15.05.2026 maturity was fully subscribed leading to an additional 20% been offered through its direct issuance window until close of business of the day prior to settlement (i.e.,4.00 pm on 14.12.2022). 

Meanwhile, activity in the secondary bond market picked up following the auction outcomes as the 15.01.2025 and 15.05.2026 maturities changed hands at level of 32.75% to 32.80% and 31.00% respectively. 

Today’s weekly Treasury bill auction will have in total an amount of Rs. 98 billion on offer, an increase of Rs. 13 billion over its previous week. 

This will consist of Rs. 50 billion on the 91-day maturity, Rs. 28 billion on the 182-day maturity and a further Rs. 20 billion on the 364-day maturity. 

At last week’s auction, weighted average rates on the 91-day and 182-day maturities remained steady at 32.91% and 32.27% respectively while weighted average rate on the 364-day maturity decreased by 13 basis points to 29.33%. An amount of Rs. 76 billion was accepted at the auction against its offered amount of Rs. 85 billion. 

The total secondary market Treasury bond/bill transacted volume for 12th December 2022 was Rs. 2.7 billion.   

In money markets, the net liquidity deficit stood at Rs. 276.49 billion yesterday as an amount of Rs. 349.81 billion was deposited at Central Banks SDFR (Standard Deposit Facility Rate) of 14.50% against an amount of Rs. 626.30 billion withdrawn from Central Banks SLFR (Standard Lending Facility Rate) of 15.50%. 

 Forex market 

In the forex market, the middle rate for USD/LKR spot contracts remained steady for a fifth consecutive day at Rs. 363.18 yesterday. 

The total USD/LKR traded volume for 12th December was $ 5.20 million.  

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

CSE turns bearish