Weekly bill auction sees Rs. 77.5 billion on offer

•  Bonds trade within narrow range
• Foreign holding in LKR bonds reduces for ninth consecutive week
• Money market liquidity improves marginally
• Rupee appreciates

By Wealth Trust Securities

The weekly bill auction due today (27 December), will see a total volume of Rs. 77.5 billion on offer, consisting of Rs. 27.5 billion on the 91-day maturity and Rs. 25 billion each on the 182-day and the 364-day maturities, reflecting a decrease of Rs. 95 billion when compared with the previous week.

At last week’s auction, the weighted average yields were seen decreasing by 2 and 5 basis points respectively on the 91-day and 182-day maturities to 14.57% and 14.24% while the total accepted volume fell short of the total offered volume for the second consecutive week. The weighted average rate on the 364-day bill increased by 10 basis points to 12.93%.

Activity in the secondary bond market took place within a narrow range during the week as the liquid maturities of 2026’s (i.e. 15.05.26, 01.06.26 and 01.08.26) and 2028’s (i.e. 01.05.28, 01.07.28 and 15.12.28) traded within the levels of 13.65% to 13.85% and 13.95% to 14.10% respectively.

Activity was also witnessed on the maturities of 2025’s (i.e. 15.01.25, 01.06.25 and 01.07.25), 2027’s (i.e. 15.01.27, 01.05.27 & 15.09.27), 15.07.29 and 15.05.30 within the range of 13.30% to 13.55%, 13.70% to 13.90%, 14.05% to 14.15% and 14.00% to 14.15% respectively. Secondary market bill maturities of January, February, March, May and June 2024 changed hands at levels of 13.25% to 13.50%, 13.75% to 14.45%, 14.10% to 14.60%, 14.50% and 13.90% to 14.25% respectively as well.

The market witnessed continued foreign selling interest of rupee bonds with an outflow of Rs. 1.39 billion for the week ending 21 December 2023, recording a total outflow of Rs. 37.41 billion over the past nine weeks, while the National Consumer Price Index (NCPI; Base 2021=100) for the month of December was seen increasing further to 2.8% on its point to point against its previous month’s figure of 1.0%.

The daily secondary market Treasury bond/bill transacted volumes for the first four days of the week averaged at Rs. 27.67 billion. 

In money markets, the Domestic Operations Department (DOD) of Central Bank injected a total amount of Rs. 4.27 billion by way of outright purchases of Treasury Bonds on the maturities of two 2026’s (i.e. 01.06.26 and 01.08.26) and 15.01.27 at weighted average rates ranging from 13.70% to 13.73%. While the Domestic Operations Department (DOD) of the Central Bank continued to inject liquidity during the week by way of overnight Reverse repo auctions at weighted average yields ranging from 9.06% to 9.13%.

The total outstanding market liquidity deficit improved marginally to Rs. 91.19 billion by the end of the week against its previous week’s of Rs. 93.78 billion while the Central Bank of Sri Lanka’s (CBSL) holding of Government Securities was registered at Rs. 2,743.62 billion against its previous week’s of Rs. 2,739.35 billion.

In the forex market, the USD/LKR rate on spot contracts was seen appreciating marginally during the week to close the week at Rs. 325.25/325.50 against its previous week’s closing level of Rs. 326.90/327.10, subsequent to trading at a high of Rs. 325.70 and a low of Rs. 327.00.

The daily USD/LKR average traded volume for the first four trading days of the week stood at $ 69.88 million. 

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