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Friday Nov 29, 2024
Thursday, 12 October 2023 00:25 - - {{hitsCtrl.values.hits}}
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 third consecutive week. The 91-day bill in particular, continued to see significant demand, which led to its weighted average yield dropping steeply by 58 basis points, as it received Rs. 113.36 billion of bids against an offered amount of only Rs. 45.00 billion. As such, similarly the 182-day and 364-day bills also declined by 13 and 06 basis points respectively to record weighted averages of 14.96% and 13.10%. The total bids received was 1.86 times greater than the total offered amount.
This was against the backdrop of last week’s Monetary Policy rate cut, that saw rates slashed by 100 basis points on both policy rates, and news that the EXIM Bank of China had reached a preliminary deal on debt treatment with the Government of Sri Lanka.
An amount of Rs. 85.71 billion or 95.24% was raised of the total offered amount of Rs. 90 billion at the 1st phase of the auction. The 2nd phase of subscription, for the 182-day and 364-day maturities will be opened until 4:00 p.m. on the day before the settlement date (i.e., 12.10.2023) at the weighted averages determined at the 1st phase of the auction. Given below are the details of the 1st phase of the auction:
Meanwhile the secondary bond market on a similar bullish note saw yields decline on active trade with some aggressive buying interest seen ahead of the upcoming auction. Accordingly, trading was predominantly seen on the liquid maturities of the 01.05.24 and the two 2026’s (i.e., 01.06.26 and 01.08.26) which saw yields dropping from 15.75% to 15.50% and 15.30% to 15.122% respectively. Additionally, trades were seen on the maturities of 01.07.25, 15.05.26 and 01.07.28 at levels of 14.90%, 15.20% and 14.50% respectively.
The Central Bank of Sri Lanka (CBSL) today is due to conduct a round of Treasury Bond auctions. The total offered amount of Rs. 25 billion is the lowest offered amount since a round of auctions conducted on 27 February, totalling Rs. 35 billion. This is also the first auction since 13 July to offer a tenor greater than 5 years as well. The details of today’s auction are given below,
For reference, at the previous bond auctions conducted on 25 September, an amount of Rs. 236.70 billion was taken up in total against a total offered amount of Rs. 220 billion which included an additional amount offered through the direct issuance window on the 01.07.2028 maturity. The weighted average rates were recorded at 15.64% and 14.52% on the 01.06.2026 and 01.07.2028 maturities respectively. The total secondary market Treasury Bond/Bill transacted volume for 10 October was Rs. 8.95 billion.
In money markets, the weighted average rates on overnight call money and Repo stood at 10.43% and 10.95% respectively while the net liquidity stood at a deficit of Rs. 61.29 billion yesterday.
The DOD (Domestic Operations Department) of Central Bank injected liquidity by way of an overnight reverse repo auction for Rs. 10.25 billion at a weighted average rate of 10.07%. An amount of Rs. 39.74 billion was withdrawn from Central Banks SLFR (Standard Lending Facility Rate) of 11.00% and an amount of Rs. 10.20 billion was deposited with the Central Banks SLDR (Standard Deposit Facility Rate) of 10.00%.
Forex Market
In the Forex market, the USD/LKR rate on spot contracts closed the day broadly steady at Rs. 323.80/323.95 against its previous day’s closing level of Rs. 323.75/324.25.
The total USD/LKR traded volume for 10 October was $ 46.80 million.
(References: Central Bank of Sri Lanka, Bloomberg E-Bond trading platform, Money broking companies)
