Record bond auction undersubscribed

• Secondary bond market sees yields drop, improved activity
• Rupee up slightly

By Wealth Trust Securities

The Treasury bond auctions conducted yesterday which saw the largest ever offered amount in Sri Lanka’s history, went undersubscribed. 

Only 29.29% or Rs. 73.22 billion was raised out of the total offered amount of Rs. 250 billion at its 1st and 2nd phases. This follows the previous Treasury bond auctions conducted on 30 October, which saw all bids rejected. Given in the chart, are the details of the auction.

Meanwhile, the secondary bond market prior to the results was quiet, and adopted a reserved stance. However, an uptick in activity was observed following the auction results. Yields dipped on the maturities of 15.01.27 and 01.07.28 from 15.10% to 14.95% and 14.80% to 14.70% respectively, with considerable volumes transacted on the 01.07.28 maturity in particular. Two-way quotes on the rest of the yield curve dipped as well.

The total secondary market Treasury bond/bill transacted volume for 10 November was Rs. 28.45 billion.

In money markets, the weighted average rates on overnight call money and Repo stood at 10.15% and 10.64% respectively while the net liquidity deficit stood at Rs. 37.57 billion yesterday.

The DOD (Domestic Operations Department) of Central Bank injected liquidity by way of an overnight auction for Rs. 27.75 billion at the weighted average rates of 10.09%. An amount of Rs. 15.40 billion was withdrawn from Central Bank’s SLFR (Standard Lending Facility Rate) of 11.00% while an amount of Rs. 5.58 billion was deposited at Central Bank’s SDFR (Standard Deposit Facility Rate) of 10.00%. 

Forex market 

In the forex market, the USD/LKR rate on spot contracts closed the day at Rs. 326.50/327.00 against its previous day’s closing level of Rs. 327.00/327.50.

The total USD/LKR traded volume for 10 November was $ 60.40 million. 

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