Bond markets close on bullish note ahead of Tuesday’s Treasury Bond auctions

Monday, 26 May 2014 00:00 - - {{hitsCtrl.values.hits}}

By Wealth Trust Securities The sentiment in secondary bond markets closed for the week ending 23 May on a bullish note as yields showed signs of dipping ahead of three bond auctions to be held on 27 May in line with the Rs. 79.2 billion bond maturity due on 1 June. The auction will consist of a 5.1 year maturity of 1 July 2019, a 14.7 year maturity of 1 January 2019 and a 30 year maturity of 1 June 2044 for volumes of Rs. 1 billion and Rs. 2 billion each respectively.

Secondary bond market yields closed the week mostly unchanged against its previous week’s closings levels subsequent to increasing during the early part of the week following the monetary policy announcement where policy rates were held steady for a fifth consecutive week. The 1 April 2018 and the 1 July 2019 maturities were the most traded durations from weekly highs of 8.55% and 9.00% to weekly lows of 8.47% and 8.94% respectively as considerable volumes were seen changing hands towards the latter part of the week. In addition, continuous demand on the shorter leg of the curve saw late 2015 maturities changing hands within the range of 7.18% to 7.25%, 2016 maturities within the range of 7.34% to 7.60% and 2017 maturities within the range of 8.00% to 8.06% as well. Meanwhile in money markets, overnight call money and repo rates remained steady to average 6.94% and 6.52% for the week despite surplus liquidity in the system decreasing to average Rs. 17.21 billion against its previous week’s average of Rs. 20.04 billion. The Open Market Operations (OMO) Department of Central Bank was seen mopping up liquidity during the week by way of two to seventy seven day term repo auctions at weighted averages ranging from 6.59% to 6.81%.

Rupee closes the week marginally lower The USD/LKR rate was seen closing the week marginally lower at Rs. 130.45/50 subsequent to dipping to an intra-week low of Rs. 130.50 on Friday on the back of import bills in comparison to its previous week’s closing of Rs. 130.36/37. The daily average USD/LKR traded volume for the first four days of the week was at $ 80.23 million. Some of the forward dollar rates that prevailed in the market were 1 Month: Rs. 130.93, 3 Months: Rs. 131.95 and 6 Months: Rs 133.38.