Accepted amount at TBill auction lower than initial offered amount for the first time in seven weeks

By Wealth Trust Securities

In contrast to the recent trends at the weekly Treasury bill auctions, the total accepted amount of Rs. 18.3 billion at yesterday auction was lower than the initial offered amount of Rs. 20 billion an occurrence which took place for the first time over the past seven weeks.

The drop in demand for the longer tenure 364 day bill which saw only an amount of Rs. 14.2 billion been accepted against its initial offered amount of Rs. 18 billion was seen as the main reason behind the dip in the overall accepted amount. However the weighted averages on all three maturities dipped by 12, 17 and 01 basis points respectively on the 91 day, 182 day and 364 day bills to levels of 9.63%, 10.41% and 11.25%.

In secondary bond markets yields continued to increase across the yield curve for a sixth consecutive day mainly centering around the two five year maturities (i.e. 15.08.2018 and 01.04.2018) as volumes traded remained high. These two maturities reflected an intraday increase of 10 basis points each to close the day at levels of 11.22/32 and 11.25/35 respectively, while the 04 year maturity reflected a 10 basis points increase to an intraday high of 11.20%. The upward trend in secondary market yields is mainly seen as a correction of the yield curve which was reflecting an inversion over the recent past.

However demand for secondary market Treasury bills remained, mainly surrounding the 364 day bill at levels of 11.16% to 11.20% prior to the auction and at levels of 11.20% to 11.24% subsequent to the auction.

Meanwhile in money markets, overnight call money and repo rates remained steady to average 9.64% and 8.87% respectively as overall surplus liquidity remained high at Rs.41.18 billion. An amount of Rs.35 billion was mopped up for a fifth straight day on an overnight basis by way of a Repo at a WAvg of 8.46% while further an amount of Rs 6.1 Bn was deposited at CBSL’s repo window of 7.50%. Meanwhile all bids for a planned term repo auction for an amount of Rs.10 billion with a maturity of 14 days was rejected.

Rupee slips marginally

The USD/LKR rate dipped marginally by 20 cents to close the day at Rs 126.85 on continued importer demand. The total USD/LKR traded volume for the previous day (21-01-13) stood at US $ 32.40 million. Some of the forward dollar rates that prevailed in the market were 1 Month - 127.94; 3 Months - 129.66 and 6 Months  - 132.33