Positive momentum in primary market continues

• Activity in secondary bond market picks up

 By Wealth Trust Securities

The positive momentum in primary market rates continued at yesterday’s weekly Treasury bill auction as well, with a total amount of Rs.20.42 billion being accepted against a total offered amount of Rs.20.5 billion. 

The weighted average yields decreased across the board with the 364 day maturity recording the highest decline of 3 basis points to 9.48% followed by the 91 day and 182 day maturities by 01 and 02 basis points respectively to 8.75% and 9.10%. The bids to offer ratio stood at 3.1:1.

In the meantime, activity in the secondary bond market picked up marginally yesterday, mainly of the shorter to mid-term maturities of 01.04.18, 01.06.18, 15.11.18, 15.09.19 and 01.05.20 at levels of 8.98% to 9.05%, 9.10%, 9.45%, 9.75% to 9.78% and 9.85% to 9.95% respectively. 

Furthermore, the 2021 maturities (i.e. 01.08.21 and 15.12.21), 01.01.24, 01.08.26 and 15.05.30 maturities were traded at levels of 10.00% to 10.12%, 10.35%, 10.30% and 10.64% respectively as well. In the secondary bill market, the April 2018 maturities changed hands at levels of 9.00%.

Inflation for the month of October was seen increasing further to 7.8% on the point to point while its annual average increased to a high of 6.1%. The total secondary market Treasury bond/bill transacted volumes for 30 October was Rs.2.72 billion.

In money markets, the overnight call money and repo rates averaged 8.14% and 7.64% respectively as the Open Market Operations (OMO) Department of the Central Bank of Sri Lanka drained out an amount for Rs.12.00 billion at a weighted average rate of 7.25% by way of overnight repo auction. The net surplus liquidity in the system decreased to Rs.13.83 billion.

The Central Bank of Sri Lanka’s (CBSL) Treasury bill holding was seen decreasing further yesterday to record a low of Rs.41.73 billion in book value terms against a high of Rs.321.19 recorded on the 04th January 2017.

 Rupee remains stable

The USD/LKR rate on spot contracts remained steady to close the day at Rs.153.50/60 yesterday. The total USD/LKR traded volume for 30 October was $ 25.95 million.

Some of the forward USD/LKR rates that prevailed in the market were: one month – 154.35/50; three months – 156.05/20; and six months – 158.55/65.