Weekly weighted average yields decrease across board

• Bond yields increase further

By Wealth Trust Securities

The weighted averages at yesterday’s weekly Treasury bill auction decreased across the board for the first time in 11 weeks following the policy rate cut as the total offered amount of Rs. 30 billion was successfully accepted. The weighted average yield on the market favorite 364 day maturity decreased the most by 17 basis points to 8.42% while the 182 day bill decreased by 16 basis points to 7.99%. The 91 day bill weighted average yield decreased by 14 basis points to 7.37% as the total bids to total offer ratio stood at 3.05:1.  

In contrast to the outcome of the primary auctions, secondary market bond yields were seen closing the day higher for a second consecutive day on moderate trading. Continued selling interest on the 2024 maturities (i.e. 15.03.24, 15.06.24 and 15.09.24) saw its yields hit intraday highs of 9.25%, 9.30% and 9.35% respectively against its previous day’s closing levels of 9.15/25 and 9.25/30 each. In addition the maturity of 15.06.27 traded at 9.60% as well.

Nevertheless, the secondary bill market remained active yesterday with maturities of March 2020, April 2020, June 2020, July 2020, August 2020, November 2020 and January 2021 changing hands at levels of 7.38% each, 8.00% to 8.02%, 8.00% to 8.10%, 8.10% to 8.12%, 8.25% and 8.35% to 8.37% respectively.

The total secondary market Treasury bond/bill transacted volume for 3 February was Rs. 11.89 billion. 

In money markets, overnight call money and Repo averaged 6.97% and 7.01% respectively as the overnight net liquidity surplus increased to Rs. 26.57 billion yesterday. The Domestic Operations Department (DOD) of the Central Bank of Sri Lanka conducted a term Reverse Repo auction yesterday and injected an amount Rs. 20.00 billion for 14 days at a weighted average rate of 7.07%, value today. 

Rupee appreciates again

The USD/LKR rate on spot contracts appreciated marginally yesterday to close the day at Rs. 181.35/40 against its previous day’s closing levels of Rs. 181.48/52, on the back of selling interest by Banks.

The total USD/LKR traded volume for 3 February was $ 81.25 million.

Some of the forward USD/LKR rates that prevailed in the market were 1 month - 181.80/00; 3 months - 182.80/00 and 6 months - 184.35/65.