Record breaking Rs. 235 b T-Bill auction in focus

• Secondary Bond market yields edge up on thin volumes
• Money market liquidity increases

By Wealth Trust Securities

The Treasury bill auction due today will see a total volume of Rs. 235.00 billion on offer, making it the largest ever offered amount in Sri Lanka’s history. This will consist of Rs. 40.00 billion on the 91-day maturity, Rs. 75.00 billion on the 182-day and Rs. 120.00 billion on the 364-day maturities.

For context, the weekly Treasury bill auction conducted last Wednesday (29 May 2024), recorded a bullish outcome. The weighted average yields declined across all three maturities for an eighth consecutive week, reaching the lowest levels since 02nd March 2022. Last week’s decline was considerably steep, with the 91-day maturity falling by 14 basis points to 8.62%, the 182-day maturity by 13 basis points to 9.04% and the 364-day maturity by 11 basis points to 9.18%. The auction went fully subscribed with the entire offered amount of Rs. 160.00 Bn accepted at the 1st phase.

The secondary bond market yesterday saw limited trades on selected maturities with yields edging up marginally and activity slowing down considerably. Accordingly, the 15.12.26 was seen trading within the range of 9.75% to 9.80%. The 15.09.27 was seen changing hands at the rate of 10.37% and the 01.01.29 maturity was seen trading at 11.25%. Additionally, trades were observed on the relatively longer tenor 01.10.32 maturity within the range of 11.85% to 11.87%. Overall transaction volumes were relatively low.

The total secondary market Treasury bond/bill transacted volume for 03rd June was Rs. 23.23 billion.

In money markets, the weighted average rate on overnight call money was at 8.68% and repo was at 8.72%.

The net liquidity surplus increased yesterday to Rs. 161.08 billion yesterday as an amount of Rs. 0.10 billion was withdrawn from Central Banks SLFR (Standard Lending Facility Rate) of 9.50% against an amount of Rs.169.56 billion deposited at Central Banks SDFR (Standard Deposit Facility Rate) of 8.50%.  Further, the DOD (Domestic Operations Department) of the Central Bank conducted an overnight reverse repo auction amounting to Rs. 8.38 billion at the weighted average rate of 8.66%.

 Forex Market

In the Forex market, the USD/LKR rate on spot contracts closed the day at Rs. 301.10/302.20 against its previous day’s closing level of Rs. 301.90/302.00.

The total USD/LKR traded volume for 3 June was US $ 71.75 million.

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