First bond auctions under new system sees weighted averages tumbling

• Secondary market bond yields decrease

 By Wealth Trust Securities

The first round of bond auctions under the new primary auction system conducted yesterday saw its weighted averages plummeting, well below its secondary market levels. 

The total offered amount of Rs. 22 billion was successfully subscribed to at the phase 1 level of the auction. The weighted average on the Treasury bond maturity of 15.06.2027 was seen decreasing by 78 basis points to 10.59% while the 01.07.2022 maturity recorded a weighted average of 10.43%, in comparison to the 15.12.2021 average of 11.14% recorded on 11 July 2017. 

The secondary bond market witnessed increased activity yesterday as its yields were seen decreasing mainly on the three 2021 maturities (i.e. 01.03.21, 01.08.21 and 15.12.21), 01.08.2024 and 01.08.2026 to daily lows of 10.55%, 10.65%, 10.55%, 10.65% and 10.75% respectively. 

In addition, buying interest on the maturities of 15.09.09, 15.05.23 and 15.05.30 saw its yields dip to daily lows of 10.10%, 10.65% and 11.21% respectively on the back of moderate volumes changing hands.  Furthermore, considerable buying interest on January 2018 Treasury bills saw it changing hands within the range of 9.60%-9.65% as well. The total secondary market Treasury bond transacted volume for 26 July was Rs. 12.19 billion.

In the money market, overnight call money and repo averaged 8.74% and 8.75% respectively as the net surplus stood at Rs. 15.00 billion yesterday. The OMO Department of Central Bank drained out an amount of Rs. 5.00 billion at a weighted average of 7.35%, by way of overnight repo auction.

 Rupee dips further

The USD/LKR rate on spot contracts depreciated further yesterday to close the day at levels of Rs. 153.75/80 against its previous day’s closing levels of Rs. 153.58/63 on the back of importer dollar demand.

The total USD/LKR traded volume for 26 July was $ 60.44 million.

Some of forward USD/LKR rates that prevailed in the market were one month - 154.80/90; three months - 156.75/85 and six months - 159.80/90.