Treasury bill auction fully subscribed for first time in 14 weeks

• In a rare phenomenon 3 to 12-month yield curve inverts
• Bids to offer ratio increases to a 61-week high

By Wealth Trust Securities 

The total offered volume at a weekly Treasury bill auction was seen getting fully subscribed for the first time in 14 weeks at its auction held on Monday, due to a shortened trading week. The total offered amount of Rs. 74.5 billion was fully taken up by way of subscription on the 91 day maturity mainly, as it represented 99.66% of the total accepted amount.

The 91 day bill weighted average increased by 35 basis points to 8.39%. However, the 182 day and 364 day maturities which were accepted after a lapse of one week recorded weighted average rates of 8.16% and 8.17% respectively, below the 91 day bill weighted average rate, inverting the short dated yield curve which is a very rare phenomenon. The bids to offer ratio increased to 61 week high of 2.89:1.  

Nevertheless, the activity in the secondary bond market was at a standstill on Monday with a majority of market participants opting to be on the side-lines.                

The total secondary market Treasury bond/bill transacted volume for 15 October was Rs. 8.72 billion.   

In money markets, the net liquidity deficit increased further to Rs. 85.58 billion on Monday as an amount of Rs. 103.00 billion was deposited at Central Banks Standard Deposit Facility Rate (SDFR) of 5.00% against an amount of Rs. 202.58 billion withdrawn from Central Banks Standard Deposit Facility Rate (SLFR) of 6.00%. 

The weighted average rates on overnight Call money and REPO remained steady at 5.91% and 5.93% respectively while the Domestic Operations Department (DOD) of the Central Bank of Sri Lanka was seen draining out amounts of Rs. 14.00 billion by way of seven day repo auctions respectively at a weighted average rate of 5.99%.

USD/LKR   

In the Forex market, the USD/LKR rate on spot contracts traded at level of Rs. 202.97 on Monday.

The total USD/LKR traded volume for 15 October was $ 64.25 million.   

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