Wednesday Jan 15, 2025
Wednesday Jan 15, 2025
Wednesday, 18 December 2024 00:11 - - {{hitsCtrl.values.hits}}
By Wealth Trust Securities
The secondary bond market experienced a continued drop in yields yesterday, driven by increased trading activity and robust transaction volumes. Strong demand was observed against the backdrop of a filing on the Singapore Stock Exchange in relation to the final results of Sri Lanka’s consent solicitation and invitation to exchange its International Sovereign Bonds. According to the filing, Sri Lanka secured a 97.86% participation rate in its debt exchange program.
In addition, it was announced that Sri Lanka’s economy recorded a 5.5% year-on-year GDP growth in the third quarter of 2024. This was the highest GDP growth number achieved over the past 13 quarters, the last instance being 13.20% for the 2nd quarter 2021. This growth occurred in a low-inflation environment, with the annual average (12 month moving average) CCPI inflation rate standing at 2.4% as of September 2024. Since then, the inflation rate has continued to ease, with November 2024 (latest available data) registering a year-on-year deflation of -2.1%, while the annual average inflation rate for the same month was at +1.7%.
The 2027 tenors: 15.09.27 and 15.10.27 were observed trading down the range of 9.92%-9.90%. The 15.02.28 and 15.03.28 maturities were seen moving down from intraday highs to lows of 10.20%-10.12% and 10.17%-10.15% respectively. The 01.05.28 and 01.07.28 maturities followed suit and saw rates decline down the ranges of 10.28%-10.25% and 10.38%-10.32% respectively. Trades were also observed on the 15.12.28 maturity at levels of 10.45% to 10.43%. The 15.09.29 maturity saw its rate decline from an intraday high of 10.73% to a low of 10.68%. The medium tenor 01.12.31 and 01.06.33 maturities traded within the ranges of 11.37%-11.35% and 11.43%-11.40% respectively.
Meanwhile in Secondary Market Bills, trades were observed on March (approximately 3 months), June (approximately 6 months) and December (approximately 12 months) 2025 maturities at the rates of 8.69%, 8.88%-8.82% and 9.01% respectively.
This comes ahead of the Treasury bill auction due today, which will have a total amount of Rs. 185 billion on offer, a decrease of Rs. 21 billion over the previous week. This will consist of Rs. 65 billion on the 91-day maturity and Rs. 75 billion on the 182-day and Rs. 45 billion on the 364-day maturity.
For reference, at the weekly Treasury bill auction conducted last Wednesday (12 December), weighted average rates declined across all three maturities. Accordingly, the weighted average recorded were 8.69%, 8.88% and 9.07% on the 3 maturities. Total bids received exceeded the offered amount by 2.27 times, and the entire Rs. 206 billion on offer was successfully raised at the 1st phase. The total secondary market Treasury bond/bill transacted volume for 16 December was Rs. 5.36 billion.
In money markets, the weighted average rates on overnight call money and Repo stood at 8.00% and 8.06% respectively. The DOD (Domestic Operations Department) of Central Bank injected liquidity by way of a 7-day term reverse repo auctions for Rs. 35 billion at the weighted average rate of 8.08%.
The net liquidity surplus stood at Rs. 162.84 billion yesterday. Rs. 0.79 billion was withdrawn from the Central Banks SLFR (Standing Lending Facility Rate) of 8.50%, while an amount of Rs. 198.63 billion was deposited at the Central Banks SDFR (Standard Deposit Facility Rate) of 7.50%.
Forex Market
In the Forex market, the USD/LKR rate on spot contracts closed the day depreciating to Rs. 291.15/291.25 as against 290.70/290.80 the previous day.
The total USD/LKR traded volume for 16 December was $ 58.90 million.
(References: Central Bank of Sri Lanka, Bloomberg E-Bond trading platform, Money broking
companies)
