T-bond auctions produce mixed results ahead of T-bill auctions

• CBSL holding of Govt. Securities decreases; liquidity continues to increase

By Wealth Trust Securities

The primary Treasury bond auctions held yesterday reflected mixed results as the second phase of the 15.10.2025 maturity was opened at its weighted average rate due to its offered amount of Rs. 27.5 billion not being fully subscribed in the first phase of the auction. Nevertheless, the offered amount of Rs. 22.5 billion on the 15.03.2028 maturity was fully subscribed in the first phase. The 15.10.2025 maturity recorded a weighted average rate of 7.30% against its stipulated cut off rate of 7.31% while the 15.03.2028 maturity recorded a weighted average rate of 7.99% against its stipulated cut-off rate of 8%. 

Activity in the secondary bond market remained rather dull yesterday. The maturities of 2022’s (i.e. 01.10.22 and 15.12.22), 2023’s (i.e. 15.03.23, 15.05.23, 15.07.23 and 01.09.23), 01.12.24 and 15.10.25 changed hands at levels of 5.62%, 5.69%, 5.95%, 6.00%, 6.05%, 6.15%, 6.75% and 7.31% respectively. In secondary market bills, July and August 2021 maturities were traded at levels of 5% and 5.11% respectively.

This is ahead of today’s bill auction, where in total an amount of Rs.37 billion will be on offer, consisting of Rs. 7 billion on the 91-day maturity and Rs. 15 billion each on the 182-day and the 364-day maturities. The stipulated cut-off rate on the 364-day maturity was increased by two basis points to 5.23%, while the maximum yield rates of the 91-day and 182-day maturities will be decided below the level of the 364-day maturity at the auction. At last week’s auction, the weighted average rates of all three maturities remained unchanged at 5.17% each and 5.21% on the 91-day, 182-day and 364-day maturities respectively.

The total secondary market Treasury bond/bill transacted volume for 28 June 2021 was Rs. 4.95 billion.   

In money markets, The CBSL’s holding of Govt. Securities was seen decreasing once again yesterday to record Rs. 919.24 billion against its previous days Rs. 1,127.65 billion, while the weighted average rates on overnight call money and repo was recorded at 4.90% and 4.91% respectively. The overnight net liquidity surplus increased further to Rs. 116.01 billion with an amount of Rs. 168.73 being deposited at Central Banks SLDR of 4.50% against an amount of Rs. 52.72 billion withdrawn from Central Banks SLFR of 5.50%.

USD/LKR   

In Forex markets, the overall market continued to remain inactive yesterday.

The total USD/LKR traded volume for 28 June 2021 was $ 32.10 million.   

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