Activity picks up as secondary market bond yields increase

Wednesday, 19 June 2013 01:10 - - {{hitsCtrl.values.hits}}

By Wealth Trust Securities

Secondary market bond yields increased once again yesterday, mainly surrounding the two liquid five-year maturities (i.e. 01.04.18 and 15.08.18) as its yields were seen hitting intraday highs of 11.30% and 11.33% respectively against its opening levels of 11.24% and 11.28%.

However buying interest at these levels saw upward momentum curtailed as it closed the day marginally lower at levels of 11.27/29 and 11.30/34 respectively.

Furthermore average volumes of the eight-year maturity continued to change hands within the range of 11.56% to 11.58%, while buying interest on secondary market bills centering on the 364-day maturity saw volumes change hands within the range of 11.77% to 11.80% as foreign investors were seen reducing their durations by selling the longer tenure and buying into the short tenure.

Meanwhile a total amount of Rs. 12 billion is on offer once again for today’s weekly Treasury bill auction with Rs. 1 billion on the 91-day, Rs. 2 billion on the 182-day and Rs. 9 billion on the 364-day bills respectively.

At last week’s auction, weighted averages (WAvg) dipped on the 91-day and 182-day bills by 3 basis points (bp) and 1 bp respectively to 8.67% and 9.80%, while the WAvg on the 364-day bill remained unchanged at 10.85%. Given below are the closing secondary market yields for the most frequently traded maturities,

In money markets yesterday, overnight call money and repo rates remained steady to average 8.50% and 8.14% respectively as overnight surplus liquidity increased further to Rs. 20.66 billion. The Open Market Operations (OMO) department of Central Bank drained an amount of Rs. 19.56 billion at a weighted average of 7.76% by way of an overnight Repo auction while a further Rs. 1.1 billion was deposited at its repo window rate of 7.00%. In addition, CBSL also drained a further Rs. 4 billion by way of a term Treasury bill auction for durations of 44 and 51-days, valued for 19 June. The 44-day bill fetched a WAvg of 8.60%, while the WAvge on the 51-day bill was 8.63%.

Rupee continues to

remain steady

The rupee closed the day steady for a second consecutive day at Rs. 128.55/60 subsequent to dipping to an intraday low of Rs. 128.75 as selling interest on forward dollar contacts was witnessed. The total USD/LKR traded volume for the previous day (17-06-13) stood at $ 74.18 million. Given below are some forward dollar rates that prevailed in the market.

1 Month              -              129.35

3 Months            -              130.65

6 Months            -              132.85