Secondary Bond market recovers, yields edge down

Thursday, 21 November 2024 00:06 - - {{hitsCtrl.values.hits}}

Bullish outcome at T-bill auction; rates drop for second consecutive week
Rupee appreciates further

By Wealth Trust Securities

At the weekly Treasury bill auction conducted yesterday, weighted average rates were seen declining across the board for the second consecutive week. Accordingly, the weighted average rates on the 91-day tenor decreased by 05 basis points to 9.30%, the 182-day tenor dropped by 04 basis points to 9.60% and the 364-day tenor declined by 10 basis points to 9.78%. Total bids received exceeded the offered amount by 2.27 times, and the entire Rs. 145.00 billion on offer was successfully raised at its 1st phase.

The 2nd phase of subscription for the auction will be opened for all 3 tenors at the weighted average rates until close of business of the day prior to settlement (i.e., 4.00 p.m. on 21.11.2024).

The Secondary bond market yesterday turned bullish once again and recovered on the back of renewed buying interest, that saw yields drop down steadily on strong demand. Market activity and transaction volumes continued to be at robust levels.

The 01.08.26 maturity saw yields decline from an intraday high of 10.20% to a low of 10.05%. The 2027 tenors followed suit with the 01.05.27, 15.09.27 and 15.12.27 maturities trading down the ranges of 10.88%-10.80%, 10.95%-10.90% and 11.02%-10.90%. The 15.02.28 and 15.03.28 maturities also saw yields decline from 11.15%-11.10%. The 01.05.28 maturity saw yields decline from an intraday high of 11.25% to a low of 11.18%. The 15.06.29 and 15.09.29 maturities saw yields drop from 11.35%-11.33% and 11.45%-11.35% respectively.

In Secondary market bills prior to the announcement of the T-bill auction results February bills (approximately 3 months) were seen trading at the rate of 9.35% which subsequently declined to 9.15% after the announcement of the bullish outcome at the auction.

In money markets, the weighted average rates on overnight call money and Repo stood at 8.58% and 8.64% respectively.

The DOD (Domestic Operations Department) of Central Bank injected liquidity by way of an overnight reverse repo auction for Rs. 40.00 billion at the weighted average rate of 8.56% respectively.

The net liquidity surplus stood at Rs. 121.38 billion yesterday. Rs. 5.44 billion was withdrawn from the Central Banks SLFR (Standing Lending Facility Rate) of 9.25% as against an amount of Rs. 166.83 billion deposited at Central Banks SDFR (Standard Deposit Facility Rate) of 8.25%.

Forex market

In the Forex market, the USD/LKR rate on spot contracts closed the day appreciating to Rs. 290.95/291.10 against its previous day’s closing level of Rs. 291.00/291.15.

The total USD/LKR traded volume for 19 November was $ 146.95 million.

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