Rs. 172.50 Treasury Bill auction in focus

•  Bond market remains active

By Wealth Trust Securities Ltd. 

This week’s weekly Treasury bill auction due today will have in total an amount of Rs. 172.50 billion on offer, a reduction of Rs. 47.50 billion over its previous week. This will consist of Rs. 60 billion on the 91-day maturity, Rs. 57.50 billion on the 182-day maturity and a further Rs. 55 billion on the 364-day maturity.

At last week’s auction, the weighted average yields of the market preferred 91-day and 182-day maturities decreased by 8 and 9 basis points respectively to 14.59% and 14.29% while the 364-day maturity decreased by 5 basis points to 12.83%. The historically high total offered amount of Rs. 220 billion saw Rs. 216 billion been raised at the first phase of the auction, with an additional amount of Rs. 0.24 raised on the 364-day tenor at the second phase.

The secondary bond market started off the day on a dull note, but subsequently a surge in activity was observed with yields moving up marginally. Where considerable volumes were seen transacted. Trades continued to be seen predominantly on the short to medium end of the yield curve. Accordingly, the maturities of 01.05.24, 01.07.25, two 26’s (01.06.26, 01.08.26), three 27’s (15.01.27, 01.05.27 and 15.09.27), three 28’s (01.05.28, 01.07.28 and 15.12.28), 15.05.30 changed hands at levels of 14.32%, 13.50%, 13.75% to 13.80%, 13.72% to 13.90%, 14.05% to 14.10% and 14.05% to 14.10% respectively.

Meanwhile in secondary market bills February, May and June were seen changing hands at yields of 14.10%, 14.50% and 14.25% respectively with considerable volumes transacted.

The total secondary market Treasury bond/bill transacted volume for 18 December 2023 was Rs. 18.94 billion.

In money markets, the weighted average rates on overnight call money and Repo stood at 9.24% and 9.64% respectively while the net liquidity deficit stood at Rs. 81.30 billion yesterday.

The DOD (Domestic Operations Department) of Central Bank injected liquidity by way of an overnight auction for Rs. 37.76 billion at the weighted average rates of 9.07%. An amount of Rs. 46.54 billion was withdrawn from Central Banks SLFR (Standard Lending Facility Rate) of 10.00% while an amount of Rs. 3 billion was deposited at Central Banks SDFR (Standard Deposit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 at Rs. 326.90/327.00 against its previous day’s closing level of Rs. 326.80/327.00.

The total USD/LKR traded volume for 18 December was $ 52.25 million. 

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