Short tenure primary and secondary market yields continue to decrease

By Wealth Trust Securities

The downward trend in weighted averages on the 91 day and 182 day maturities continued for a fifth consecutive week at its weekly Treasury bill auction held yesterday. 

The 91 day recorded the sharpest decline of 14 basis points to 8.40% followed by the 182 day by 03 basis points to 8.90%. However, the weighted average on the 364 day maturity remained steady at 9.46% following an increase of 02 basis points the previous week.

The total accepted amount of Rs.20.27 billion was just short of the total offered amount of Rs.21 billion. 

In the secondary bond market yesterday, yields on the very short end of the curve were seen decreasing mainly on the maturities of 01.04.18, 15.07.18, 15.11.18, 01.07.19 and the 01.05.20 to intraday lows of 8.55%, 9.00%, 9.35%, 9.65% and 9.79% respectively against its previous day’s closing levels of 8.65/75, 9.05/15, 9.40/55, 9.70/80 and 9.82/88 on the back of buying interest.

In addition, activity was witnessed on the 01.08.21, 01.09.23, 01.01.24, 01.08.26 and 15.05.30 maturities at levels of 10.02%, 10.10% to 10.11%, 10.18% to 10.20%, 10.25% and 10.60% respectively as well.

In the secondary bills market, February, July and August 2018 maturities were traded at lows of 8.35%, 8.98% and 9.05% respectively.

The total secondary market Treasury bond/bill transacted volumes for 21 November 2017 was Rs.2.26 billion.

In money markets, the OMO (Open Market Operations) Department of the Central Bank of Sri Lanka was seen draining out an amount of Rs.10.78 billion on an overnight basis by way of a Repo auction at a weighted average of 7.25% as the net surplus in the system stood at Rs.28.34 billion yesterday. The overnight call money and repo rates averaged 8.14% and 7.57% respectively.

Rupee remains steady for a second consecutive day

In Forex markets, the USD/LKR rate on spot contracts remained steady for a second consecutive day at Rs.153.76/82 as the market was at equilibrium.

The total USD/LKR traded volume for 21 November was $ 55.20 million.

Some of the forward USD/LKR rates that prevailed in the market were: one month – 154.55/65; three months – 156.40/50; and six months – 159.00/15.