Secondary bond market quiet; yields edge up

• Rs. 100 b T-bill auction fully taken up
• Rupee depreciates slightly

By Wealth Trust Securities

The secondary bond market yesterday saw subdued trading conditions as market participants were seen adopting a watchful approach, with yields edging marginally.

Accordingly, the yield on the 15.12.26 maturity was seen moving up from 11.05% to 11.10%, intraday. Similarly, the 01.07.28 maturity was seen moving up from 12.60% to 12.65%. Additionally, trades were observed on the 15.05.30 maturity up from 13.10% to 13.15%.

Meanwhile, the Treasury bill auction conducted yesterday saw weighted average yields on the shorter tenor securities increasing for the third consecutive week. Accordingly, the rate on the 91-day tenor increased by 07 basis points to 9.49% and the 182-day tenor by 04 basis points to 9.84%. In contrast, the 364-day tenor saw its weighted average hold steady at 10.01%.  The entire Rs. 100.00 billion on offer was raised at the first phase. The total bids received exceeded the offered amount by 1.86 times.

The bulk of the funds raised were from the shorter tenors, with 97% of the total accepted amount attributable to the 91- and 182-day tenors. In particular, maturity-wise the 91- and 182-day raised more than their respective offered amounts, while the take up on the 364-day maturity was below the offered amount.

The second phase of the auction will be opened on 91-day and 364-day maturities at its weighted average rates until close of business of the day prior to settlement (i.e., 4.00 pm on 29.08.2024).

Given below are the details of the auction

The total secondary market Treasury bond/bill transacted volume for 27 August was Rs. 11.51 billion.

In money markets, the weighted average rates on overnight call money and were 8.57% and 8.71%, respectively.

The net liquidity surplus stood at Rs. 104.71 billion yesterday as an amount of Rs. 125.41 billion was deposited at Central Bank’s SDFR (Standing Deposit Facility Rate) of 8.25% as against an amount of Rs. 0.69 billion been withdrawn from the Central Bank’s SLFR (Standing Lending Facility Rate) of 9.25%. The DOD (Domestic Operations Department) of Central Bank injected liquidity by way of an overnight reverse repo auction for Rs 20.00 billion at the weighted average rate of 8.48%.

Forex Market 

In the Forex market, the USD/LKR on spot contracts closed the day depreciating to Rs. 300.60/300.80 against its previous day’s closing level of Rs. 300.00/300.30. 

The total USD/LKR traded volume for 27 August was $ 66.00 million. 

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