Weekly T - bill average yields decline for the first time in five weeks

Secondary bond market yields increase

By Wealth Trust Securities

The weighted average yields at the weekly primary bill auction were seen declining for the first time in five auctions on Tuesday, reversing an upward trend witnessed previously, with the 364 day maturity recording a decrease of 05 basis points to 10.39%. 

However, bids received for the 91 day maturity were rejected while the 182 day bill was not on offer. The total offered amount of Rs. 7.5 billion was fully accepted as the bid to offer ratio increased to a fourteen week high of 4.57:1. 

The secondary bond market yields were seen increasing on Tuesday on the back of considerable volumes. Yields of the liquid maturities consisting of 01.03.21, 15.10.21, 15.03.23 and 15.07.23 increased to intraday highs of 10.85% each, 11.40%  and 11.38% respectively against its previous day’s closing levels of 10.65/70, 10.70/80, 11.18/25 and 11.22/26. Furthermore, the 2019’s (i.e. 01.07.19, 15.09.19) were seen changing hands at levels of 10.05% to 10.20% as well. In the secondary bill market, April maturities were seen trading at levels of 9.70%.  

The total secondary market Treasury bond/bill transacted volume for 22 October was Rs. 3.7 billion.  

In the money market, the OMO Department of the Central Bank, injected liquidity by way of an overnight and a seven day term repo auction for amounts of Rs. 10.00 billion and Rs. 5.27 billion respectively, at weighted average yields of 8.41% and 8.44% as the net liquidity shortfall increased further to Rs. 28.37 billion. 

An additional amount of Rs. 6.6 billion was also injected by way of a 14 day term repo auction at a weighted average yield of 8.45%, value today. Call money and repo rates averaged 8.44% and 8.49% respectively. 

Rupee dips to Rs. 173

 In the Forex market, the USD/LKR rate on spot contracts depreciated further on Tuesday to hit a new low of Rs. 173.00 and closed the day at Rs. 172.50/70 against its previous day’s closing levels of Rs. 172.30/60 on the back of continued buying interest.

The total USD/LKR traded volume for 22 October was $ 28.05 million.  Given are some forward USD/LKR rates that prevailed in the market: 1 month – 173.50/80; 3 months – 175.50/00; 6 months – 178.40/90.