Positive momentum at T-bill auctions continue ahead of T-bond auctions

• Bond yields dip marginally

By Wealth Trust Securities

The market favourite 91 day bill weighted average yield decreased for a second consecutive week at its auction held yesterday, recording another steep dip of 20 basis points to 7.98% and falling below the 8.00% psychological levels for the first time over the past five weeks. The 182 day and 364 day bill weighted average yields dipped as well, by 09 and 07 basis points respectively to 8.12% and 8.19%.

The total offered amount of Rs. 52 billion was successfully accepted at the auction, predominantly by way of the 91 day bill while the bids to offer ratio increased to a 69 week high of 3.85:1. Given below are the details of the auction. 

The outcome of the weekly Treasury bill auction saw yields in the secondary bond market decrease yesterday. The liquid maturities of 15.12.23 and 15.01.27 hit intraday lows of 9.00% and 11.00% respectively against its previous day’s closing levels of 9.10/30 and 11.00/05. In addition, 15.11.23, 15.01.26, 01.09.28 and 15.05.30 maturities traded at a level of 9.00%, 10.50%, 11.53% and 11.68% to 11.71% as well. In the secondary bill market, 4 February maturity was seen changing hands at a level of 8.00%, prior to the auction. 

Today’s Treasury bond auctions will have on offer an amount of Rs. 40 billion in total, consisting of Rs. 15 billion of a 15.03.2024 maturity and Rs. 25 billion of a 15.03.2031 maturity. The weighted average yields at the bond auctions conducted on 28 October were 9.94%, and 11.61% for the maturities of 15.03.25 and 01.09.28 respectively. The second phase of the auction was opened for the undersubscribed 15.03.25 maturity while a direct issuance window was opened for the fully subscribed 01.09.28 maturity. 

The total secondary market Treasury bond/bill transacted volume for 9 November was Rs. 0.65 billion.   

In money markets, the net liquidity deficit decreased to Rs.1 93.34 billion yesterday as an amount of Rs. 85.24 billion was deposited at Central Banks Standard Deposit Facility Rate (SDFRs) of 5.00% against an amount of Rs. 308.58 billion withdrawn from Central Banks Standard Deposit Facility Rate (SLFR) of 6.00%. 

The Domestic Operations Department (DOD) of the Central Bank of Sri Lanka was seen draining out an amount of Rs. 30.00 billion by way of an overnight repo auction at a weighted average rate of 5.98%. The 07 day Repo auction for Rs. 10 billion drew no bids. However, it further drained out an amount of Rs. 10.00 billion by way of a 14 day repo auction at a weighted average rate of 6.05%, valued today. The weighted average rates on overnight Call money and REPO registered at 5.93% and 5.94% respectively.

USD/LKR   

In the Forex market, the USD/LKR rate on spot contracts traded at level of Rs. 202.97 to Rs. 202.99 while the overall market remained inactive yesterday.

The total USD/LKR traded volume for 9 November was $ 38.50 million.   

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