Weekly Bill Auction fully subscribed; averages continue to dip

• Secondary bond market holds steady; subdued activity
• Rupee down

By Wealth Trust Securities

This week’s Treasury bill auction conducted yesterday, received a bullish response once again as all three weighted average yields decreased across the board for a second consecutive week. The 91-day and 182-day bills saw the most demand, which led to its weighted average yield declining by 25 basis points and 6 basis points respectively to 15.39% and 14.75% while receiving bids of Rs. 144.74 billion and Rs. 102.08 billion against offered amount of only Rs. 75.00 billion and Rs. 65.00 billion respectively. The 364-day bills also declined by 03 basis points to record a weighted average of 12.96. The total bids received was 1.63 times greater than the total offered amount.

The entire offered amount of Rs. 175 billion was raised at the 1st phase of the auction. The 2nd phase of subscription, for only the 182-day and 364-day maturities will be opened until 4:00 p.m. on the day before the settlement date (i.e., 16.11.2023) at the weighted averages determined at the 1st phase of the auction. Given below are the details of the 1st phase of the auction:

However, the secondary bond market saw yields hold broadly steady bearing the 2026 and 2027 durations, with relatively subdued activity. Accordingly, trades were observed on the selected maturities of the two 26s (01.06.26 and 15.05.26) and two 27s (15.01.27 and 15.09.27), within levels of 14.85% to 14.70% and 14.70%, respectively, on thin volumes. Meanwhile, a 24 January maturity was seen trading prior to the auction at 15.00% on the back of considerable volumes changing hands.

The total secondary market Treasury bond/bill transacted volume for 14 November 2023 was Rs. 8.79 billion.

In money markets, the weighted average rates on overnight call money and Repo stood at 10.38% and 11.00% respectively while the net liquidity stood at a deficit of Rs. 46.84 billion yesterday.

The DOD (Domestic Operations Department) of Central Bank injected liquidity by way of an overnight reverse repo auction for Rs. 41.18 billion at a weighted average rate of 10.21%. An amount of Rs. 45.85 billion was withdrawn from Central Banks SLFR (Standard Lending Facility Rate) of 11.00% while an amount of Rs. 40.19 billion was deposited at the Central Banks SDFR (Standard Deposit Facility Rate) of 10.00%.

Forex Market 

In the Forex market, the USD/LKR rate on spot contracts closed the day by depreciating slightly to Rs. 328.70/328.80 against its previous day’s closing level of Rs. 327.70/328.00. The total USD/LKR traded volume for 14 November was $ 30.80 million. 

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