Thursday Nov 07, 2024
FT
Thursday Nov 07, 2024
Monday, 4 November 2024 01:26 - - {{hitsCtrl.values.hits}}
By WealthTrust Securities
The Rs. 32.50 billion Treasury bond auction conducted last Monday (28 October), recorded a bullish outcome.
A 15.10.28 maturity (bearing an 11.00% coupon) was issued at a weighted average yield of 11.84% with the entire Rs. 20 billion offered raised at the first phase of subscription. In addition, a 01.06.33 maturity (bearing a 9.00% coupon) was issued at a weighted average rate of 12.36%. However, the bond failed to raise the entire offered amount of Rs. 12.50 billion at the first phase, leading to the opening of the second phase. Subsequently, the maturity was fully subscribed across both phases. In conclusion, the auction overall saw total bids received exceed the offered amount by 3.82 times and the entire Rs. 32.50 billion successfully raised across both phases. In addition, Rs. 2.00 billion, being the maximum amount offered, was raised out of the total market subscription of Rs. 4 billion via the Direct Issuance Window only on the 2028 tenor.
In contrast, at the weekly Treasury bill auction conducted last Wednesday (30 October), weighted average rates increased marginally on the shorter tenors, marking the first rise in six weeks. The week prior, rates remained unchanged after four weeks of steady decline. Specifically, the weighted average rate on the 91-day tenor rose by three basis points to 9.35%, while the 182-day tenor also increased by three basis points to 9.68%. However, the 364-day tenor’s weighted average rate remained unchanged at 9.95%. Total bids received exceeded the offered amount by 2.05 times, and the full Rs. 145.00 billion on offer was successfully raised at the first phase. In addition, Rs. 8.03 billion was raised at phase two on the 182 and 364-day tenors.
The secondary bond market last week saw mostly sideways trading. Sporadic bouts of buying interest were met with profit-taking selling pressure. Even with the bullish outcome at the bond auction on Monday, yields in the secondary market remained mostly unchanged. For the rest of the week, activity cooled down, with subdued overall market action and transaction volumes at moderate levels. Two-way quotes were seen closing broadly steady on a week-on-week basis.
The popular and liquid 15.02.28 and 15.03.28 maturities were seen trading within the range of 11.75% to 11.70%. The relatively longer 2028 tenors of 01.07.28 and 15.12.28 changed hands at the rates of 11.85%-11.80% and 11.90%-12.00% respectively. Additionally, trades were seen on the medium tenor 15.06.29 and 15.09.29 maturities at the rate of 12.00%.
In conclusion, at the close of the week, the yield curve remained mostly unchanged, as the market reached a consolidation phase.
On the inflation front, the Colombo Consumer Price Index (CCPI) (Base: 2021=100) for the month of October 2024 was recorded at -0.80% on a year-on-year basis as against -0.50% recorded in September 2024. This undershot the Central Bank of Sri Lanka’s target of 5.00%, as it has since March. The drop was primarily driven by lower prices in the housing category and the Government’s reduction in petrol prices.
For the week ending 30 October 2024, the foreign holdings in Rupee treasuries saw a net inflow of Rs. 1.77 billion. This marked the seventh consecutive week of positive inflows. As a result, total foreign holdings reached Rs. 52.92 billion.
The daily secondary market Treasury bond/bill transacted volumes for the first three days of the week averaged at Rs. 23.07 billion.
In money markets, total outstanding liquidity reduced to Rs. 80.05 billion by the end of the week ending 1 November, up from Rs. 86.30 billion recorded the previous week. The Domestic Operations Department (DOD) of the Central Bank injected liquidity during the week by way of overnight reverse repo auctions and a seven-day term reverse repo auction at weighted average rates of 8.40% and 8.63%, respectively. The weighted average interest rate on call money and repo ranged between 8.53% to 8.55% and 8.67% to 8.72% respectively.
The Central Bank of Sri Lanka’s (CBSL) holding of Government Securities was registered at Rs. 2,515.62 billion as at 1 November 2024, unchanged from the previous week’s level.
Forex market
In the Forex market, the USD/LKR rate on spot contracts was seen appreciating, to close the week at Rs. 292.95/293.05 as against its previous week’s closing level of Rs. 293.60/293.70 and subsequent to trading at a high of Rs. 292.75 and a low of Rs. 293.75.
The daily USD/LKR average traded volume for the first three trading days of the week stood at $ 57.89 million.
(References: Central Bank of Sri Lanka, Bloomberg E-Bond trading platform, Money broking companies)
