Weekly auction positive momentum continues

• Secondary bond yields remain steady; rupee gains slightly

By Wealth Trust Securities

This week’s Treasury bill auction conducted yesterday, continued to receive a positive response. The 91-day and 182-day tenors continued to see the most demand, which led to the weighted average yields declining by 2 basis points and 5 basis points respectively to 14.57% and 14.24%. It received bids of Rs. 128.24 billion and Rs. 142.92 billion respectively against offered amount of Rs. 60.00 billion and Rs. 57.50 billion. However, the 364-day bills increased by 10 basis points to record a weighted average of 12.93%. The total bids received was 1.92 times greater than the total offered amount.

An amount of Rs. 156.16 billion or 90.53% of the total offered amount of Rs. 172.50 billion was raised at the 1st phase of the auction. The 2nd phase of subscription, for only the 364-day maturity will be opened until 4:00 p.m. on the day before the settlement date (i.e., 21.12.2023) at the weighted average determined at the 1st phase of the auction. Given below are the details of the 1st phase of the auction;

The secondary bond market saw yields hold broadly steady with activity being subdued, with thin volumes being transacted. Accordingly, trades were observed on the selected following maturities of the 15.01.25, two 27’s (15.01.27 and 01.05.27), 01.07.28, 15.07.29 and 15.05.30 within the ranges of 13.30%, 13.90% to 13.70%, 14.10% to 14.05%, 14.10% and 14.05% to 14.00% respectively.

In secondary market bills March and June 2024 maturities were seen changing hands within the ranges of 14.60% to 14.10% and 14.15% to 13.90% % respectively. 

The total secondary market Treasury bond/bill transacted volume for 19 December 2023 was Rs. 16.41 billion.

In money markets, the weighted average rates on overnight call money and Repo stood at 9.14% and 9.55% respectively while the net liquidity deficit stood at Rs. 81.03 billion yesterday.

The DOD (Domestic Operations Department) of Central Bank injected liquidity by way of an overnight auction for Rs. 39.95 billion at the weighted average rates of 9.07%. An amount of Rs. 41.08 billion was withdrawn from Central Banks SLFR (Standard Lending Facility Rate) of 10.00%. 

Forex Market

In the Forex market, the USD/LKR rate on spot contracts closed the day at Rs. 326.75/326.85 against its previous day’s closing level of Rs.326.90/327.00.

The total USD/LKR traded volume for 19 December was $ 66.95 million.

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