T-bill auction rates decline for 2nd consecutive week

• Secondary bond market holds steady
• Rupee stable

By Wealth Trust Securities

The Rs. 110.00 billion Treasury bill auction held yesterday was fully subscribed, and the weighted average rates were seen decreasing across the board for a second consecutive week. Robust demand was observed, as total bids received exceeded the offered amount by 2.80 times, reflecting the significant buying interest observed in the secondary market in the run-up to this auction.

This week’s decline was notably steep with the weighted average yield on the 91-day maturity decreasing by 36 basis points, registering at 9.55%. The 182-day maturity yield was down by 32 basis points, standing at 9.78% while the 364-day maturity yield reduced by 14 basis points to record at 10.07%.

The 2nd phase of subscription, across all three maturities will be opened until 4:00 p.m. on the day before the settlement date (i.e., 18.07.2024) at the respective weighted averages determined at the 1st phase of the auction. Given below are the details of the auction;

The yields in the secondary bond market closed broadly steady yesterday, while activity and overall transaction volumes remained healthy. However, some concentrated buying interest was observed on the late 2027/early 2028 tenor bonds. The bulk of the action was seen during the early hours ahead of the T-Bill auction results, and was seen focused on short tenor bonds.

Accordingly, the 01.08.26 maturity was seen trading at the lower yield of 10.50%. The 15.12.27 tenor in particular saw demand drive its yield to a fresh low of 11.65%. This momentum was also witnessed on the 15.02.28 maturity in particular which saw its yield decline from 11.75% to 11.70%. However, the remaining 2028 tenors remained mostly stable with the 15.03.28, 01.05.28 and 01.07.28 maturities seen transacting at the rates of 11.75%, 11.80% and 11.82%. The 15.09.29 held steady, in line with the rest of the market, settling at the rate of 12.05%. Additionally, trades were observed on the 15.05.30 maturity at the rate of 12.20%.

The total secondary market Treasury bond/bill transacted volume for 16 July was Rs. 18.91 billion.

In money markets, the weighted average rates on overnight call money and Repo stood at 8.75% and 9.04% respectively while the net liquidity surplus increased to Rs. 117.20 billion yesterday against its previous days Rs. 42.69 billion. An amount of Rs. 133.03 billion was deposited at Central Banks SDFR (Standard Deposit Facility Rate) of 8.50%, while an amount of Rs. 0.83 billion was withdrawn from Central Banks SLFR (Standard Lending Facility Rate) of 9.50%.

Further, the DOD (Domestic Operations Department) of Central Bank conducted an overnight reverse repo auction amounting to Rs. 15.00 billion at a weighted average rate of 8.77%.

Forex Market

In the Forex market, the USD/LKR rate on spot contracts closed the day steady at Rs. 303.80/304.00, against its previous day’s closing level of Rs. 303.70/304.00.

The total USD/LKR traded volume for 16 July was $ 12.90 million.

(References: Central Bank of Sri Lanka, Bloomberg E-Bond trading platform, Money broking companies)