Primary bond auctions produce impressive outcomes

Friday, 29 October 2021 00:00 - - {{hitsCtrl.values.hits}}

Secondary market bond yields dip further

By Wealth Trust Securities

The Treasury bond auctions conducted yesterday produced impressive outcomes registering weighted averages below its secondary market yields as the 15.03.2025 maturity recorded a weighted average rate of 9.94% against its previous day’s closing rate of 9.75/10.50 for a similar maturity. Furthermore, the 01.09.2028 maturity recorded a weighted average rate of 11.61% against its previous day’s closing rate of 10.50/12.00 for a similar maturity.

The phase 2 of the auction was opened for the 2025 maturity while an issuance window of 20% of the offered amount on the 2028 maturity was opened until close of business of the day prior to settlement (i.e. 4 p.m. on 29.10.2021).

The secondary bond market yields declined further yesterday, mainly following the auction outcomes as the liquid maturities of 15.12.23 and 15.01.27 hit intraday lows of 9.20% and 11.10% respectively against its previous day’s closing levels of 9.25/35 and 11.20/30. In addition, 01.09.28 maturity changed hands at a level of 11.58% to 11.62%. In secondary bills, the 91 day bill maturity traded at levels of 7.90% to 8.00%.

The total secondary market Treasury bond/bill transacted volume for 27 October was Rs. 39.01 billion.

In money markets, the weighted average rates on overnight call money and REPO remained mostly unchanged at 5.90% and 5.96% while the net liquidity deficit decreased to Rs. 136.97 billion yesterday. An amount of Rs. 84.38 billion was deposited at Central Bank’s Standard Deposit Facility Rate (SDFR) of 5.00% against an amount of Rs. 265.43 billion withdrawn from Central Bank’s Standard Deposit Facility Rate (SLFR) of 6.00%.

In addition, the Domestic Operations Department (DOD) of the Central Bank of Sri Lanka was seen draining out amounts of Rs. 18.68 billion and Rs. 25.4 billion by way of overnight and 6 day repo auctions at weighted average rates of 5.99% and 5.98% respectively.

USD/LKR

In the Forex market, the USD/LKR rate on spot contracts traded at level of Rs. 202.97 to Rs. 203.00 yesterday.

The total USD/LKR traded volume for 27 October was $ 40.80 million.

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