Bond yields dip marginally following rejection of auction bids

By Wealth Trust Securities

The rejection of all bids at yesterday’s Treasury bonds auctions despite sizable demand saw yields on the liquid maturities dipping marginally. 

The yields on the maturities of 01.08.21, 01.01.24, 15.03.25 and 01.06.26 were seen hitting daily lows of 11.50%, 11.98%, 11.99% and 12.20% respectively reversing an upward trend in morning hours of trading where yields touched highs of 11.55%, 12.15%, 12.15% and 12.30%.

This was ahead of today’s weekly Treasury bill auction, where a total amount of Rs.25 billion will be on offer consisting of Rs.9 billion each on the 91 day and 182 day maturities and a further Rs.7 billion on the 364 day maturity. 

At last week’s auction, weighted averages dipped across the board for a second consecutive week to record 8.45%, 9.54% and 10.10% respectively. 

Meanwhile in money markets, the injection of liquidity for a eleventh consecutive day amounting to Rs.50 billion at a weighted average rate of 7.98% by the Open Market Operations (OMO) department of Central Bank saw the weighted averages on overnight call money and repo rates remaining at 8.14% and 8.16% respectively yesterday. 

The liquidity in the system stood at a net deficit of Rs.52.09 with a further amount of Rs.12.32 billion being accessed from the Standard Lending facility rate of 8.00% (SLFR) against a deposit amount of Rs.1022 Billion at its Standing Deposit Facility Rate (SDFR) of 6.50%.

Rupee depreciates further  

Meanwhile in Forex markets yesterday, the USD/LKR rate on active spot next contracts depreciated further to close the day at Rs.145.70/00 against its previous day’s closing of Rs.145.40/75. The total USD/LKR traded volume for 15 April was $ 39.20 million. 

Given are some forward USD/LKR rates that prevailed in the market: one month – 146.60/90; three months – 148.35/60; and six months – 150.65/95.