Yields continue to pick up ahead of T-bill auction; rupee appreciates slightly

By Wealth Trust Securities

The Secondary Bond Market yields continued to increase yesterday as the liquid maturities of 15.02.28, 15.03.28, 01.07.28, 15.09.29 and 15.10.30 hit intraday highs of 12.23%, 12.30%, 12.47% 12.57% and 12.885% respectively against its previous day’s closing levels of 12.10/20, 12.15/25, 12.35/45, 12.45/50 and 12.75/85. In addition, 01.12.31 maturity changed hands at levels of 12.92% to 12.95% as well.

The Treasury bill auction due today will have a total amount of Rs. 155 billion on offer, a reduction of Rs. 15 billion over its previous week. This will consist of Rs. 55 billion each on the 91-day and 182-day maturities and Rs. 45 billion on the 364-day maturity.

For context, last Wednesday’s Treasury bill auction weighted average yields remained unchanged following consecutive three weeks of declines. Accordingly, the rates were recorded at 9.14% for the 91-day tenor, 9.34% for the 182-day tenor, and 9.95% for the 364-day tenor. The auction went undersubscribed, with only 94.43% (Rs. 160.53 billion) of the Rs. 170.00 billion was raised, across the 1st and 2nd phases. Strong demand was observed on the shorter tenors, with 84% of the accepted bids attributable to the 91-day and 182-day tenors.

The total secondary market Treasury bond/bill transacted volume for 5 August was Rs. 14.59 billion.

In money markets, the weighted average rate on overnight call money was at 8.56% and repo was at 8.88%.

The net liquidity surplus stood at Rs. 34.23 billion yesterday as an amount of Rs. 102.96 billion was deposited at Central Banks SDFR (Standard Deposit Facility Rate) of 8.25% as against an amount of Rs. 5.70 billion withdrawn from the Central Bank’s SLFR (Standard Lending Facility Rate) of 9.25%. 

The DOD (Domestic Operations Department) of Central Bank injected liquidity by way of an overnight and 7-day term reverse repo auction for Rs. 13.04 billion and Rs. 50.00 billion at the weighted average rates of 8.45% and 8.85% respectively.

Forex Market 

In the Forex market, the USD/LKR rate on spot contracts appreciated marginally to close trading yesterday at Rs. 302.05/302.15 against its previous day’s closing level of Rs. 302.30/302.43.

The total USD/LKR traded volume for 5 August was $ 32.90 million.

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