Secondary bond market steady ahead of Primary Auctions

Tuesday, 2 April 2019 00:00 - - {{hitsCtrl.values.hits}}

By Wealth Trust Securities

The secondary bond market yields remained mostly unchanged yesterday with activity moderating due to a “wait and see” approach adopted by most market participants ahead of today’s primary Treasury bond auctions.

At the auction, a total amount of Rs. 40 billion will be on offer consisting of Rs. 15 billion on a new two year and 11 months maturity of 15 March 2022 and Rs. 25 billion on a seven year and nine months maturity of 15 January 2027. The previous Treasury bond auctions conducted on 12 March for the maturities of 15.03.24 and 01.05.29 recorded weighted averages of 11.04% and 11.35% respectively.

In the secondary bond market, limited amount of activity was seen on the two liquid maturities of 15.03.24 and 01.05.29 at levels of 10.96% to 10.98% and 11.40% respectively while the two 2021s (i.e. 01.08.21 and 15.12.21) and three 2023s (i.e. 15.03.23, 15.05.23 and 15.07.23) changed hands with the range of 10.52% to 10.55% and 10.86% to 10.95% respectively.

The total secondary market Treasury bond/bill transacted volumes for 29 March was Rs. 6.2 billion.

In money markets, the overnight call money and repo rates averaged 8.53% and 8.58% respectively as the Open Market Operations (OMO) department of the Central Bank of Sri Lanka continued to inject an amount of Rs. 9.12 billion and Rs. 10.00 billion on an overnight and seven-day basis at weighted averages of 8.53% and 8.51% respectively yesterday. The overnight net liquidity shortfall in the system increased to Rs. 24.04 billion.

Rupee continues to appreciate

The appreciating trend in the USD/LKR rate on spot contracts continued yesterday as it was seen closing the day at Rs. 174.60/75 against its previous day’s closing levels of Rs. 175.30/50 on the back of sustained selling interest by banks.

The total USD/LKR traded volume for 29 March was $84.05 million.

Some of the forward USD/LKR rates that prevailed in the market were one month - 175.55/85; three months - 177.35/75 and six months - 180.00/40.