Rs. 215 b T-Bill auctions in focus

• Secondary bond market yields increase; activity moderate

By Wealth Trust Securities

The Treasury bill auction scheduled for today will offer a total volume of Rs. 215.00 billion. This is a reduction of Rs. 20.00 billion from the previous week. This will consist of Rs. 40.00 billion on the 91-day maturity, Rs. 100.00 billion on the 182-day and Rs. 75.00 billion on the 364-day maturities.

For context, at last Wednesday’s Treasury bill auction, the entire offered amount of Rs. 235 billion, the largest in Sri Lanka’s history was fully subscribed at the first phase. Total bids exceeded the offered amount by 1.54 times, an impressive result given the scale of the auction. However, weighted average yields rose: the 91-day maturity increased by 8 basis points to 8.70%, and the 364-day maturity by 9 basis points to 9.27%, while the 182-day maturity remained stable at 9.04%. This marked the first increase in rates, after eight weeks of consecutive declines across all three maturities.

Meanwhile, the secondary bond market saw yields edging up with increased activity yesterday. Accordingly, the 15.12.26 was seen hitting an intraday high of 10.15% from an intraday low of 10.05%, on the back of considerable volumes. Similarly, the other 2026 tenors also saw yields move up, the 15.05.26 and 01.08.26 were seen trading up the range from 9.95% to 10.10%. The 15.09.27 maturity was seen changing hands at the rate of 10.75%. The 2028 tenors also witnessed yields increasing, with the 15.01.28 and 15.03.28 maturities trading at 11.00% and the 01.05.28 and 01.09.28 maturities trading at 11.10% and 11.25% respectively. The medium tenor 15.05.30 was seen trading within the ranges of 11.88% to 11.90%. 

In money markets, the weighted average rate on overnight call money was at 8.70% and repo was at 8.76%.

The net liquidity surplus increased yesterday to Rs. 157.75 billion yesterday as an amount of Rs. 0.04 billion was withdrawn from Central Banks SLFR (Standard Lending Facility Rate) of 9.50% against an amount of Rs. 173.89 billion deposited at Central Banks SDFR (Standard Deposit Facility Rate) of 8.50%.  Further, the DOD (Domestic Operations Department) of Central Bank conducted an overnight reverse repo auction amounting to Rs. 16.10 billion at the weighted average rate of 8.68%.

Forex Market 

In the Forex market, the USD/LKR rate on spot contracts closed the day at Rs. 303.50/303.75 against its previous day’s closing level of Rs 303.20/303.50.

The total USD/LKR traded volume for 10 June was US $ 24.25 million.

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