Weekly auction fully subscribed for first time in 5 weeks

• Bids to offer ratio increases to an 8 week high
• Bond yields decrease

By Wealth Trust Securities

The outcome of the weekly Treasury bill auction was seen reversing its fortunes yesterday as its total offered amount of Rs. 40 billion was fully subscribed for the first time in five weeks, with the 364-day bill leading the way with an accepted amount of Rs. 25.7 billion or 64.34%. Furthermore, the weighted average on the 91-day bill was recorded at 4.59%, one basis point below its stipulated cut off rate while the weighted averages on the 182-day and 364-day bills were recorded at its stipulated cut off rates of 4.71% and 4.99% respectively. The bids-to-offer ratio increased to an eight-week high of 1.98:1. 

The secondary bond market remained active yesterday as yields were seen declining once again on the back of revived buying interest. The liquid maturities of 2022’s (i.e. 15.11.22 & 15.12.22), 15.01.23, 01.05.25, 01.02.26 and 15.10.27 saw its yields dip to intraday lows of 5.55% each, 5.58%, 6.30%, 6.60% and 6.90% respectively against its previous day’s closing levels of 5.55/60, 5.58/62, 5.60/70, 6.35/38, 6.60/63 and 6.92/98. Furthermore, two 2024’s (i.e. 01.08.24 & 15.09.24) and 01.06.26 were seen changing hands at level of 6.10%, 6.19% and 6.62% respectively. In the secondary bill market, January and February 2021 maturities were traded at levels of 4.62% to 4.65% as well.

The total secondary market Treasury bond/bill transacted volumes for 13 October was Rs. 11.94 billion.   

In the money market, the high overnight surplus liquidity of Rs. 177.04 billion saw weighted averages on overnight call money and Repos remaining broadly unchanged at 4.53% and 4.59% respectively yesterday. Further, the DOD (Domestic Operations Department) of the Central Bank injected an amount of Rs. 10 billion by way of a 14-day reverse repo auction at a weighted average rate of 4.53%, valued today.

Rupee dips further

In the Forex market, USD/LKR rate on spot contracts depreciated further yesterday to close the day at Rs. 184.75/90 against its previous day’s closing level of Rs. 184.30/40, on the back of buying interest by banks.

The total USD/LKR traded volume for 13 October was $ 177.60 million.   

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