Treasury Bill yields up after 4 weeks of consecutive declines

• Secondary bond market activity picks up ahead of Monetary Policy announcement

By Wealth Trust Securities

This week’s Treasury bill auction saw weighted average rates increasing across the board, breaking the trend of a four-week streak of continuous declines. The increases were registered at 42, 16 and 12 basis points on the 91-day, 182-day and 364-day maturities respectively to record weighted averages of 17.97%, 15.03% and 13.31%.

A total of Rs. 124.79 billion was accepted as against a total offered volume of Rs. 130 billion at the 1st phase of the auction, while an additional amount of Rs. 15.85 billion was raised at the 2nd phase of the auction. Given below are the details of the 1st phase of the auction:

The secondary bond market saw an increase in activity levels ahead of the Monetary Policy Announcement due today at 7.30 a.m. The Central Bank of Sri Lanka was seen reducing its Standard Deposit Facility Rate (SDFR) and Standard Lending Facility Rate (SLFR) by 200 basis points at its previous announcement on 5 July.

Trades were seen on the liquid maturities of 01.07.25, 15.09.27, 01.05.28 and 15.05.30 as it changed hands at levels of 13.65% to 13.75%, 13.02% to 13.20%, 12.75% to 12.90% and 12.50% respectively.

The total secondary market Treasury bond/bill transacted volume for 22 August was Rs. 15.88 billion.

In money markets, the DOD (Domestic Operations Department) of Central Bank injected liquidity by way of an overnight reverse repo auction for a volume of Rs. 102.85 billion at a weighted average rate of 11.51% while an amount of Rs. 60.09 billion was withdrawn from Central Banks SLFR (Standard Lending Facility Rate) of 12.00%. The net liquidity deficit stood at Rs. 162.94 billion yesterday.

The weighted average rates on overnight call money and repo were registered at 11.54% and 12.00% respectively.

Forex Market 

In the Forex market, the USD/LKR rate on spot contracts traded within the range of Rs. 324.00 to Rs. 324.75 yesterday before closing the day at Rs. 324.00/324.25. 

The total USD/LKR traded volume for 22 August was $ 38.20 million.

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