Bond yields edge up marginally ahead of weekly bill auction

Wednesday, 23 October 2013 00:00 - - {{hitsCtrl.values.hits}}

By Wealth Trust Securities Secondary market bond yields which move inversely to their price edged up marginally, primarily on the two liquid maturities of 1 January 2017 and 1 April 2018 ahead of this week’s Treasury bill auction due to be held today. Today’s decisive auction, the first following the Central Bank’s policy rate cut of 50 basis points, will have on offer an total amount of Rs. 10 billion, of which Rs. 1 b each will consist of 91 day and 182 day bills and Rs. 8 b of the 364 day bills. The weighted averages at last week’s auction prior to the rate cut stood at 8.56%, 9.60% and 10.49% respectively. The secondary bond market witnessed considerable volumes with intraday lows of 10.84% and 11.05% on the above mentioned maturities, and continuing to close the day higher at 10.86/88 and 11.10/11, subsequent to hitting intraday highs of 10.88% and 11.13%. Furthermore, the 15 August 2018 maturity was seen changing hands within a daily low of 11.14% to a high of 11.17%. The secondary bill market saw January 2014 bills changing hands within the range of 8.25% to 8.40%, May 2014 within 9.15% to 9.35%, June 2014 within 9.40% to 9.45% and the 364 day bill within 10.07% to 10.10%. Overnight call money and repo rates remained steady to average 7.85% and 7.12% respectively despite surplus liquidity in money markets decreasing to Rs. 7.57 b yesterday. The Central Bank continued to mop up an amount of Rs. 1.73 billion through its Open Market Operations at a WAvg yield of 7.45% for a period of seven days while a further amount of Rs. 5.84 b was deposited at its Repo rate of 6.50%. Rupee gains for a third consecutive day In dollar/rupee markets, the rupee gained marginally for a third consecutive day to close the day at Rs. 130.85/90 in comparison to its previous weeks closing of 130.94/98 on the back of export conversions. The total USD/LKR traded volume for the previous day (21 October) stood at US$ 60.50 million. Some of the forward dollar rates that prevailed in the market were one month – 131.73; three months – 133.33; and six months -135.68.