Activity picks up as yields dip following sovereign dollar bond issue
Wednesday, 9 April 2014 00:00
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By Wealth Trust Securities
The successful launch and attractive pricing of 5.125% in comparison to the yield of 6.00% paid in January 2014, for Sri Lanka’s seventh sovereign dollar bond issue with an oversubscription of 8.3 times, saw activity increase in secondary bond markets yesterday as yields were seen dipping once again ahead of today’s weekly Treasury bill auction. Activity continued to centre the liquid two 2018 maturities (i.e. 01.04.2018 and 15.08.2018) and 01.07.2019 maturity as its yields were seen dipping to intraday lows of 8.73%, 8.85% and 9.05% respectively during morning hours of trading against its previous day’s closing levels of 8.77/80,8.87/91 and 9.11/14. However, profit taking at these levels curtailed any further downward movement. In addition a limited amount of activity witnessed on the short tenure maturity of 1 November 2015 within the range of 7.48% to 7.50% and the 01.05.2021 maturity within 9.94% to 9.96%.
At today’s auction, an total amount of Rs. 5 billion will be on offer, the lowest in twenty seven (27) weeks, consisting of Rs. 0.5 billion each on the 91-day and 182-day maturities and Rs. 4 billion on the 364-day maturity respectively.
At last week’s auction, weighted averages dipped for a twenty eighth (28) consecutive week with the 91-day and 182-day maturities reflecting dips of 1 basis points each to 6.64% and 6.81% respectively while the weighted average on the 364-day maturity remained unchanged for a third consecutive week at 7.05%.
Meanwhile in money markets, overnight call money and repo rates remained steady to average 6.96% and 6.53% respectively as surplus liquidity stood at Rs. 20.99 billion yesterday. The Open Market Operations (OMO) department of Central Bank was seen draining out an amount of Rs. 9.56 billion on an overnight basis at a weighted average of 6.53% while an additional Rs. 11.43 billion was deposited at its Standing Deposit Facility Rate (SDFR) of 6.50%.
Rupee gains marginally
The rupee closed the day marginally higher at Rs. 130.59/62 yesterday in comparison to its previous day’s closing levels of Rs. 130.68/71 on the back of the success of the sovereign dollar bond issue. The total USD/LKR traded volume for the previous day (7 April 2014) stood at $ 43.45 million.
Some of the forward dollar rates that prevailed in the market were 1-Month: Rs. 131.20, 3-Months: Rs. 132.26 and 6-Months: Rs. 133.76.
