Weekly Treasury Bill Averages continue to trickle down

• Secondary bond market rallies; Rupee dips 

By Wealth Trust Securities

This week’s Treasury bill auction conducted yesterday, retained last week’s momentum with a bullish outcome. The weighted average rates dropped across the board for a fourth consecutive week. 

The 91-day bill in particular, continued to see the most demand, which led to its weighted average yield declining steeply by 34 basis points to 16.30%, as it received bids of Rs. 85.99 billion against an offered amount of only Rs. 30 billion. Similarly, the 182-day and 364-day bills also declined by two and eight basis points respectively, to record weighted averages of 14.94% and 13.02%. The total bids received was 2.08 times greater than the total offered amount.

An amount of Rs. 56.65 billion or 87.16% was raised of the total offered amount of Rs. 65 billion at the first phase of the auction. The second phase of subscription, for all three maturities, will be open until 4:00 p.m. on the day before the settlement date (i.e., 19.10.2023) at the weighted averages determined at the first phase of the auction. 

Meanwhile, the secondary bond market on a similar bullish note, saw yields decline on active trade on the back of some aggressive buying interest seen during the day. Accordingly, trading continued to be predominantly on the 2026 tenors of 01.06.26, 15.05.26 and 01.08.26 which saw its yields dropping from 15.15% to 14.95%. Additionally, trading was seen on the maturities of 01.05.24, two 2027’s (i.e., 01.05.27 and 15.09.27) and two 2028’s (i.e., 01.05.28 and 01.07.28) with yields declining from levels of 15.60% to 15.35%, 15% to 14.90% and 14.68% to 14.60% respectively.

The total secondary market Treasury bond/bill transacted volume for 17 October 2023 was Rs. 14.09 billion.

In money markets, the weighted average rates on overnight call money and Repo stood at 10.33% and 10.81% respectively while the net liquidity stood at a deficit of Rs. 90.53 billion yesterday.

The DOD (Domestic Operations Department) of Central Bank injected liquidity by way of an overnight reverse repo auction for Rs. 36.90 billion at a weighted average rate of 10.10%. An amount of Rs. 53.63 billion was withdrawn from Central Bank’s SLFR (Standard Lending Facility Rate) of 11.00%.

Forex Market 

In the Forex market, the USD/LKR rate on spot contracts closed the day by depreciating slightly to Rs. 324.50/324.65 against its previous day’s closing level of Rs. 324.10/324.40. The total USD/LKR traded volume for 17 October was $ 91.50 million. 

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

companies)