Rs. 60 b T. bond auction fully subscribed; yields increase and cross 13.00%

• Rs. 130 b T. bill auction in focus
• Secondary bond market at standstill  
• Rupee continues to appreciate steadily

By Wealth Trust Securities

The two Treasury bond auctions conducted yesterday saw yields increase, reflecting the recent upward trend observed in the secondary market and continuing the increasing trend at Bond auctions. The new 15.06.2029 maturity bond was issued at a weighted average yield of 12.98%, above a pre-market rate of 12.65/80 for a similar maturity. Only Rs. 36.09 billion (80.20%) out of the Rs. 45.00 billion on offer was raised at the 1st phase, in competitive bidding. However, the balance amount was raised in subsequent phases, leading to full subscription.

Meanwhile, the 01.10.32 maturity was issued at a weighted average of 13.25%, also above pre-auction rates. This marks the first instance since January this year that a primary auction rate at a bond auction has increased above 13.00%. However, the longer tenor was fully subscribed right off the bat, leading to the opening of its direct issuance window.

In conclusion, the round of auctions successfully raised the total Rs. 60 billion on offer in its entirety, with the total bids received to total the offered amount ratio standing at 1.72:1.

Given below are the details of the auction,

Meanwhile, the Treasury bill auction due today will have a total amount of Rs. 130 billion on offer, a reduction of Rs. 25 billion over its previous week. This will comprise of Rs. 60 billion for the 91-day maturity and Rs. 35 billion each on the 182-day and the 364-day maturities.

For context, at last week’s Treasury bill auction, weighted average yields increased across the board, reversing a declining trend prior. Accordingly, the rate on the 91-day tenor increased by 08 basis points to 9.22%, the 182-day tenor by 22 basis points to 9.56% and the 364-day tenor by 11 basis points to 10.06%.

The Secondary Bond Market saw very limited activity yesterday, pre and post auction. Accordingly, trades were observed on the 01.02.26 and 01.06.26 maturities at the rates of 10.45% and 10.90% respectively, prior to the release of the T-Bond auction results.

The total secondary market Treasury bond/bill transacted volume for 12 August was Rs. 15.53 billion.

In money markets, The DOD (Domestic Operations Department) of Central Bank injected liquidity by way of overnight and 7-day term reverse repo auctions for Rs. 9.03 billion and Rs. 35.00 billion at the weighted average rates of 8.52% and 8.88% respectively. The net liquidity surplus stood at Rs. 62.66 billion yesterday as an amount of Rs. 106.69 billion was deposited at Central Banks SDFR (Standard Deposit Facility Rate) of 8.25%. 

The weighted average rates on overnight call money and Repo stood at 8.55% and 8.85% respectively.

Forex Market 

In the Forex market, the USD/LKR rate on spot contracts closed the day appreciating further to Rs. 299.10/299.25 as against its previous day’s closing level of Rs. 299.50/299.80.

The total USD/LKR traded volume for 12 August was $ 50.60 million. 

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