Secondary bond market yields hold steady; activity subdued

• Rs. 120 b Treasury bill auction in focus
• Rupee dips slightly

By Wealth Trust Securities

The Secondary Bond Market yields held broadly steady yesterday on the back of subdued activity. Limited trades were observed on the 01.02.26, 01.07.28 and 15.12.28 maturities at levels of 10.62%, 12.70%, and 12.85% respectively. Additionally, trades were observed on the medium tenor bonds of 15.09.29 and the 01.06.33 at the rate of 13.00% and 13.25%.

The Treasury bill auction due today will have a total amount of Rs. 120 billion on offer, a reduction of Rs. 10 billion over its previous week. This will consist of Rs. 55 billion on the 91-day, Rs 35 billion 182-day and Rs. 30 billion on the 364-day maturity.

For context, last Wednesday’s Treasury bill auction saw mixed results. The 91-day tenor rate rose by 17 basis points to 9.39%, and the 182-day rate increased by 12 basis points to 9.68%, while the 364-day tenor saw a slight decline, with its rate dipping by 3 basis points to 10.03%. The auction was fully subscribed, raising the entire Rs 130.00 billion on offer in the first phase. An additional amount of Rs. 8.48 billion was raised at the 2nd phase.

The total secondary market Treasury bond/bill transacted volume for 16 August was Rs. 7.53 billion.

In money markets, the weighted average rate on overnight call money was at 8.61% and repo was at 8.72%.

The net liquidity surplus stood at Rs. 50.15 billion yesterday as an amount of Rs. 128.49 billion was deposited at Central Banks SDFR (Standard Deposit Facility Rate) of 8.25% as against an amount of Rs. 5.95 billion withdrawn from the Central Bank’s SLFR (Standard Lending Facility Rate) of 9.25%. 

The DOD (Domestic Operations Department) of Central Bank injected liquidity by way of an overnight and 7-day term reverse repo auction for Rs. 32.39 billion and Rs. 40 billion at the weighted average rates of 8.59% and 9.04% respectively.

Forex Market 

In the Forex market, the USD/LKR rate on spot contracts depreciated marginally to close trading yesterday at Rs. 299.60/300.00 against its previous day’s closing level of Rs. 299.00/299.10.

The total USD/LKR traded volume for 16 August was $ 80.65 million.