Weekly Bill auction fully subscribed; Averages continue to slide

• Secondary Bond market rallies

By Wealth Trust Securities

This week’s Treasury bill auction conducted yesterday, received a bullish response once again. The 91-day and 182-day bills saw the most demand, receiving bids of Rs. 97.39 billion and Rs. 88 billion against offered amounts of Rs. 55 billion and Rs. 60 billion respectively.

However, it was only the 91-day bill average which dipped by 10 basis points to 15.29% while the 182-day average remained steady while the 364-day bill also declined by 2 basis points to 12.94%. The total bids received was 1.50 times greater than the total offered amount.

The entire offered amount of Rs. 145 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 open until 4 pm on the day before the settlement date (i.e., 23.11.2023) at the weighted averages determined at the 1st phase of the auction. Given below are the details of the 1st phase of the auction:

The secondary bond market experienced an upsurge in activity with one wave of buying interest driving yields down as considerable volumes were transacted prior to the Treasury Bill Auction results and steadied subsequent to the auction outcome. Trading was observed across the yield curve, centring on the short to medium end, with some block trades seen. Accordingly, trades were observed on the two 25s (01.06.25 and 01.07.25), two 26s (01.06.26 and 01.08.26), three 27s (15.01.27, 01.05.27 and 15.09.27), three 28s (15.01.28, 01.05.28 and 01.07.28), 01.05.29 and 15.05.30 maturities at levels of 14.40% to 14.20%, 14.65% to 14.35%, 14.70% to 14.40%, 14.75% to 14.50%, 14.67% and 14.50% to 14.40% respectively.

Meanwhile, January, February and May 2024 maturities were seen trading prior to the auction at 15% each and 14.65% respectively on the back of considerable volumes changing hands.

The total secondary market Treasury bond/bill transacted volume for 21 November 2023 was Rs. 7 billion.

In money markets, the weighted average rates on overnight call money and Repo stood at 10.25% and 10.75% respectively while the net liquidity stood at a deficit of Rs. 83.77 billion yesterday.

The DOD (Domestic Operations Department) of Central Bank injected liquidity by way of an overnight reverse repo auction for Rs. 55.18 billion at a weighted average rate of 10.17%. An amount of Rs. 28.95 billion was withdrawn from Central Banks SLFR (Standard Lending Facility Rate) of 11% while an amount of Rs. 0.36 billion was deposited at the Central Banks SDFR (Standard Deposit Facility Rate) of 10%.

Forex Market 

In the Forex market, the USD/LKR rate on spot contracts closed the day by remaining relatively flat at Rs. 328.50/328.65 against its previous day’s closing level of Rs. 328.60/328.75.

The total USD/LKR traded volume for 21 November was $ 40.40 million. 

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