Three-year bond yield dips to 11.00%

• CCPI jumps to 14.2%; liquidity shortfall increases further

By Wealth Trust Securities

The secondary bond market, on the back limited and moderate activity witnessed buying interest during the week ending 3 February which led to yields decreasing on selected maturities. 

Trades were mainly seen on the three-year maturities of 2025’s (i.e. 15.03.25, 01.05.25 and 01.08.25) and 15.01.33 maturity as its yields were seen hitting weekly lows of 11.01% and 12.96% respectively against its week’s weeks highs of 11.40% and 13.02%. In addition, 15.03.24 maturity traded at a level of 10.45% as well. 

At the weekly Treasury bill auction, all bids for the 182 day and 364 day bills were rejected while the total offered amount of Rs. 88.5 billion was solely accepted from the 91 day bill against its initial offered amount of Rs. 38 billion. The weighted average on the 91 day bill was seen decreasing for the first time in eight weeks to 8.59%, reflecting a drop of 04 basis points. 

In the meantime, the Colombo Consumer Price Index (CCPI; Base 2013=100) for the month of January increased sharply to a high of 14.2% on its point to point against its previous month’s figure of 12.1% along with the annual average increasing as well to 6.9% from 6.0%. 

The foreign holding in rupee bonds remained mostly unchanged at Rs. 2.65 billion for the week ending 02nd February while the daily secondary market Treasury bond/bill transacted volumes for the first three trading days of the week averaged Rs. 22.65 billion.  

In money markets, a historically high volume of Rs. 605.3 billion was accessed from Central Banks Standard Lending Facility Rate (SLFR) of 6.50% during the week while the total outstanding liquidity deficit continued its increasing trend to register at Rs. 579.36 billion by the end of the week against its previous weeks Rs. 558.96 billion.  

The weighted average rates on call money and repo remained mostly unchanged at 6.48% and 6.50% respectively for the week. 

The Domestic Operations Department (DOD) of Central Bank was seen draining out liquidity during the week by way of overnight repo auctions at a weighted average yield of 6.49% as an average of Rs. 61.90 billion was deposited throughout the week at Central Banks Standard Deposit Facility Rate (SDFR) of 5.50%. 

Forex market

In the Forex market, the USD/LKR rate on spot contracts continued to trade at Rs. 203.00 during the week while overall activity remained moderate. 

The daily USD/LKR average traded volume for the first three trading days of the week stood at $ 42.88 million.  

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