Robust outcome at primary bond auctions

• Secondary market bond yields decline

By Wealth Trust Securities

The outcome of the Rs. 120 billion of Treasury bond auctions conducted yesterday saw its weighted averages record impressive outcomes, below its secondary market yields. 

The four years and 10 month maturity of 15 March 2024 fetched a weighted average of 10.98% while the 11 years and 10 month maturity of 15 March 2031 fetched a weighted average of 11.27%. 

The secondary bond market yields were seen decreasing subsequent to the auction results and following an increase in morning hours of trading. The liquid maturities of 15.12.23 and 15.03.24 dipped to intraday lows of 10.90% and 10.87% respectively against its opening highs of 11.10% and 11.05%. 

In addition, activity was witnessed on the two 2021s (i.e. 01.03.21 and 01.08.21), 15.03.22, 15.07.23, 01.08.26, two 2027s (i.e. 15.01.27 and 15.06.27) and 01.05.29 maturities at levels of 10.20%, 10.40% to 10.30%, 10.60% to 10.50%, 10.75%, 11.15% to 10.95%, 11.00%, 11.10% to 11.05% and 11.15% to 11.11% respectively as well. 

Meanwhile, today’s Treasury bill auction will see a total amount of Rs. 27 billion on offer, consisting of Rs. 3 billion on the 91 day, Rs. 6 billion on the 182 day and Rs. 18 billion on the 364 day maturities. At last week’s auction, the weighted average yields of the 91-day and 182-day maturities decreased to 8.94% and 9.14% respectively while the weighted average on the 364-day bill stood steady at 9.91%. 

The total secondary market Treasury bond/bill transacted volumes for 26 April was Rs. 8.11 billion. 

In money markets, the overnight call money and repo rates remained mostly unchanged to average 8.52% and 8.66% respectively as the net liquidity surplus stood at Rs. 51.09 billion yesterday. 

The OMO department of Sri Lanka injected an amount of Rs. 4.7 billion by way of an overnight reverse repo auction at weighted averages of 8.50% while an amount of Rs. 67.91 billion was deposited at CBSL’s Standing Deposit Facility (SDF) at the rate of 8.00% against an amount Rs. 12.12 which was drawn down from its Standing Lending Facility (SLF) at the rate 9.00%.

Rupee appreciates marginally 

 The USD/LKR rate on the one week forward contract was seen appreciating marginally yesterday to close the day at Rs. 176.10/40 against its previous weeks closing of Rs. 176.30/50 on the back of selling interest by banks.

The total USD/LKR traded volume for 26 April was $ 38.61 million.

Given some forward USD/LKR rates that prevailed in the market: one month – 177.10/40; three months – 179.00/30; six months – 181.90/30.