Upward momentum in Govt. security yields continue

By Wealth Trust Securities

The upward momentum in primary and secondary market Government security yields continued during the week ending 8 October, following through from its previous week. The weighted average rates at the weekly Treasury bill auction increased across the board by 45, 21 and 27 basis points on the 91-day, 182-day and 364-day maturities, respectively.

However, activity in the secondary bond market continued at a sporadic pace as most market participants opted to be on the sidelines ahead of scheduled Treasury bond auctions for 12 October and the upcoming monetary policy announcement. Limited trades were witnessed on the maturities of 2023’s (i.e. 15.01.23, 15.07.23, 01.10.23 and 15.11.23) and 2024’s (i.e. 15.09.24 and 01.12.24) at levels of 8.20% to 8.50% and 9.00% to 9.02%, respectively.

The foreign holding in rupee bonds stood at Rs. 1,861.77 million for the week ending 6 October while the daily secondary market Treasury bond/bill transacted volumes for the first four trading days of the week averaged Rs. 8.74 billion. 

In money markets, the total outstanding liquidity shortage at the end of the week decreased sharply to Rs. 119.86 billion against its previous weeks of Rs. 240.01 billion while CBSL’s holding of Government securities increased to Rs. 1,450.21 billion against its previous weeks of Rs. 1,336.05 billion. Nevertheless, the weighted average rates on overnight call money and repo remained mostly unchanged at 5.91% and 5.93%, respectively, for the week against its previous weeks 5.94% and 5.93% as the Domestic Operations Department (DOD) of Central Bank drained out liquidity during the week from overnight to seven-day period by way of repo auctions at weighted average yields ranging from 5.95% to 5.98%. The overnight net liquidity shortfall fluctuated during the week, within a high of Rs. 48.21 billion to a low of Rs. 9.86 billion.

USD/LKR

In the forex market, the USD/LKR rate on spot contracts traded within the range of Rs. 202.97 to Rs. 202.99 during the week while overall activity remained moderate.

The daily USD/LKR average traded volume for the first four trading days of the week stood at $ 33.02 million. 

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