Saturday Sep 28, 2024
Saturday Sep 28, 2024
Monday, 11 December 2023 00:00 - - {{hitsCtrl.values.hits}}
By Wealth Trust Securities
The Central Bank of Sri Lanka (CBSL) is due to conduct a fresh round of Treasury bond auctions this week, on 12 December.
The auctions will see a total offered amount of Rs. 160 billion. This will comprise of Rs. 50.00 billion from 1 August 2026 maturity bearing a coupon of 11.50%, Rs. 80.00 billion from a 15 December 2028 maturity bearing a coupon of 11.50% and Rs. 30.00 billion from a 15 March 2031 maturity bearing a coupon of 11.25%.
For context, the previous round of Treasury bond auctions conducted on 28 November recorded a robust outcome as the entire Rs. 45 billion on offer was fully subscribed at its 1st and 2nd phases. The 15 January 2027 maturity recorded a weighted average 14.48% and the 1 September 2028 maturity recorded a weighted average yield of 14.52%. A further Rs. 4.50 billion was raised on the 1 September 2028 maturity at the direct issuance window as well.
Last week’s Treasury bill auction continued to receive a positive response as weighted average yields decreased across the board for a second consecutive week. The 91-day and 182-day tenors continued to see the most demand, which led to the weighted average yields declining by 19 basis points and 14 basis points respectively to 14.67% and 14.38%. It received bids of Rs. 97.17 billion and Rs. 135.20 billion respectively against offered amounts of Rs. 55.00 billion and Rs. 60.00 billion. The 364-day bill also declined marginally by 1 basis points to record a weighted average of 12.88%. The entire offered amount of Rs. 185 billion was raised at the 1st phase of the auction while an additional Rs. 0.5 billion was raised at the 2nd phase only on the 364-day maturity only.
Secondary bond market activity continued to be centred mainly on the short end of the yield curve from durations of 2024 to 2028. Accordingly, the yields on the maturities of the 01.05.24, two 25’s (01.06.25 and 01.07.25), three 26’s (15.05.26,01.06.26 and 01.08.26), three 27’s (15.01.27,01.05.27 and 15.09.27) and three 28’s (15.01.28, 01.05.28 and 01.07.28) were seen trading within the ranges of 14.30%, 14.00% to 13.50%, 14.20% to 13.95%, 14.35% to 14.10% and 14.40% to 14.10% respectively. In addition, on the medium end of the curve, 15.05.30 and 01.07.32 maturities changed hands at 14.35% to 14.22% and 14.26% respectively as well.
Additionally, in secondary market bills, December 2023 maturities were seen trading at 12.88% to 11.00% while January, February and March 2024 maturities were seen changing hands between 13.10% and 13.00%, 14.35% and 14.35% to 14.10%, with considerable volumes transacted.
The foreign holding in Rupee bonds and bills continued to decline for a seventh consecutive week, with a net outflow of Rs. 1.05 billion, bringing the total holding to Rs. 123.83 billion as at 9 December 2023.
The daily secondary market Treasury bond/bill transacted volumes for the first four days of the week averaged at Rs. 36.52 billion.
In money markets, the total outstanding liquidity deficit increased marginally to Rs. 77.19 billion by the week ending 1 December from its previous week’s deficit of Rs. 63.61 billion. The Domestic Operations Department (DOD) of the Central Bank continued to inject liquidity during the week by way of overnight Reverse repo auctions at weighted average yields ranging from 9.06% to 9.13%.
The Central Bank of Sri Lanka’s (CBSL) holding of Government Securities was registered at Rs. 2,739.35 billion, against its previous week’s level of Rs. 2,759.35 billion.
Forex market
In the forex market, the USD/LKR rate on spot contracts was seen appreciating slightly during the week to close at Rs. 327.00/327.30. This is as against its previous week’s closing level of Rs. 328.00/328.10. This was subsequent to trading at a high of Rs. 326.40 and a low of Rs. 328.32.
The daily USD/LKR average traded volume for the first four trading days of the week stood at $ 83.45 million.
(References: Central Bank of Sri Lanka, Bloomberg E-Bond trading platform, Money broking companies)
