Rs. 160 b Treasury Bill Auction in the spotlight

• Bond Market sees moderate activity; Rupee gains marginally

By Wealth Trust Securities

The weekly Treasury bill auction due today will have in total an amount of Rs. 160 billion on offer, which will consist of Rs. 40 billion on the 91-day maturity, Rs. 70 billion on the 182-day maturity and a further Rs. 50 billion on the 364-day maturity.

For context, last week, the total offered amount of Rs. 77.5 billion was taken up at the first phase of the auction for the first time in three weeks while weighted average rates decreased. On a week-on-week basis the 182-day bill decreased the most by eight basis points to 14.16% while the 91-day maturity registered a dip of six basis points to 14.51%. The weighted average rate on the 364-day bill held steady at 12.93%. An additional amount of Rs. 8.92 billion was raised at the second phase.

The secondary bond market saw two-way quotes edge up, with relatively slim volumes being transacted. The market continued on a dull note, with the selected maturities of the two 26’s (15.05.26 and 01.06.26), 15.09.27 and 01.07.28 seeing limited trades within the levels of 13.90% to 14.00%, 13.85% to 14.00% and 14.25% respectively.

Conversely, Secondary market Treasury bills saw strong demand, particularly on very shorter tenures. Large volumes were seen transacting on January, March and June 2024 maturities at 11.75% to 11.00%, 14.15% to 14.00% and 14.00% respectively, with the bulk of the volumes transacted on the January bills.

The total secondary market Treasury bond/bill transacted volume for 1 January 2024 was Rs. 6.80 billion.

In money markets, the weighted average rates on overnight call money and Repo stood at 9.17% and 9.92% respectively while the net liquidity deficit stood at Rs. 105.69 billion yesterday.

The DOD (Domestic Operations Department) of Central Bank injected liquidity by way of an overnight Repo auction for Rs. 51.28 billion at a weighted average rate of 9.09%. An amount of Rs. 54.92 billion was withdrawn from Central Banks SLFR (Standard Lending Facility Rate) of 10% while an amount of Rs. 0.51 billion was deposited at Central Banks SDFR (Standard Deposit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 marginally higher at Rs. 321.50/322.00 against its previous day’s closing level of Rs. 322.20/322.40.

The total USD/LKR traded volume for 1 January was $ 82.50 million.

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