Record breaking Rs. 270 b Bond auction snapped up

• Rs. 180 b Treasury Bill Auction in focus Rupee holds broadly steady

The largest Treasury bond auction conducted in Sri Lanka’s history, witnessed a bullish outcome yesterday as the entire offered amount of Rs. 270 billion was fully taken up while averages recorded mixed results. The weighted average yields were seen increasing as compared to the previous round of bond auctions conducted on 13 February, on the same 2026 and 2028 durations.

The 15.12.26 recorded a weighted average rate of 11.33% as against its pre-auction rate of 11 and compared to 10.81% at its previous auction while the 15.12.28 average was recorded at 12.25% as against its pre-auction rate of 12.20/40 and compared to 11.90% at the previous auction. The 15.03.31 was issued at a weighted average of 12.42% as against its pre-auction rate of 12.35/65. The total bids received exceeded the total offered amount by close to two times, which is an impressive outcome given the scale of the auction.

An issuance window of 20% each, of its offered amount on only the 2028 and 2031 maturities, will be open until close of business of the day prior to settlement date (i.e., 4.00 p.m. on 14.03.2024) at its respective weighted Average Yield Rates (WAYRs).

The secondary bond market was quiet at the start of the day as it had been in the days running up to the auction. However, after the release of the Treasury bond auction results yields were seen recording mixed results with increased activity. Trades were observed on the auction maturities of 15.12.26 trading up from 11.33% to 11.40%, while the 15.12.28 was seen trading down from 12.20% to 12.15% respectively. Additionally, trades were observed on the 01.07.32 maturity at 12.75%. Volumes overall continued to remain moderate however.

This week’s Treasury bill auction due today, will have in total an amount of Rs. 180 billion on offer, which will consist of Rs. 50 billion on the 91-day maturity, Rs. 75 billion on the 182-day maturity and a further Rs. 55 billion on the 364-day maturity. This reflects an increase of Rs. 20 billion on the offered amount on a week-on-week basis.

For context, at the weekly Treasury bill auction conducted last Wednesday, the weighted average yields were seen increasing across all three maturities, for a second consecutive week. The 91-day maturity increased by nine basis points to 9.96%, the 182-day maturity increased by 13 basis points to 10.08%, while the 364-day maturity also went up by nine basis points to stand at 10.14%. The auction saw the entire offered amount being fully subscribed, for the first time in two weeks, at the first phase of the auction. The total bids received exceeded the total offered amount by 1.45 times. An additional amount of Rs. 2.55 billion was raised at the second phase.

The total secondary market Treasury bond/bill transacted volume for 11 March was Rs. 12.64 billion.

In money markets, the weighted average rates on overnight call money and Repo stood at 9.20% and 9.31% respectively as the DOD (Domestic Operations Department) of Central Bank injected liquidity by way of an overnight and seven day term reverse repo auctions for Rs. 56.07 billion and Rs. 25 billion respectively at weighted average rates of 9.20% and 9.30%.

The net liquidity deficit stood at Rs. 36.49 billion yesterday as an amount of Rs. 0.35 billion was withdrawn from Central Banks SLFR (Standard Lending Facility Rate) of 10% against an amount of Rs. 44.94 billion being deposited at Central Banks SDFR (Standard Deposit Facility Rate) of 9%. 

Forex Market

In the Forex market, the USD/LKR rate on spot contracts closed the day at Rs. 306.50/306.60 as against its previous day’s closing level of Rs. 306.95/307.10.

The total USD/LKR traded volume for 11 March was $ 105.03 million. 

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