Primary market yields continue to decrease: Secondary market yields follow suit

By Wealth Trust Securities

The weighted averages at yesterday’s Treasury bond auctions were seen decreasing considerably in comparison to its previously recorded averages on similar maturities at its auctions conducted on 9 May.

The 5.11 year maturity of 15.05.2023 recorded the sharpest decrease of 11 basis points to 11.38%, closely followed by the 7.09 year maturity of 15.03.2025 by nine basis points to 11.41% against a previously auctioned maturity of 01.08.25 while the 4.02 year maturity of 01.08.2021 dipped by five basis points to 11.37% against a previously auctioned maturity of 15.12.21. 

The weighted average on the newly offered 10-year maturity of 15.06.27 stood at 11.49%. The total accepted amount stood at Rs. 45.00 billion, exactly as its total offered amount of Rs. 45 billion.

Activity in secondary bond markets increased yesterday as yields were seen decreasing on the back of considerable buying interest ahead of the weekly Treasury bill auction due today.

The liquid maturities of 15.12.21, 15.05.23, 01.01.24  and 01.08.26 were seen hitting intraday lows of 11.25%, 11.38%, 11.47% and 11.50% respectively against its previous day’s closing levels of 11.36/42, 11.50/60, 11.50/55 and 11.60/65. Furthermore, the maturities of 01.08.2021 and 01.08.24 were seen changing hands at lows of 11.25% and 11.48% as well. In the secondary bill market, April 2018 maturities were traded at a low of 10.45%.

Today’s bill auction will have on offer a total amount of Rs. 26 billion consisting of Rs. 3.5 billion of the 91-day, Rs. 14 billion of the 182-day and Rs. 8.5 billion of the 364-day maturities. At last week’s auction, the weighted average on 364-day deceased sharply by 10 basis points to 10.61% while weighted averages on the 91-day and 182-day maturities dipped by one basis point each to 9.60% and 10.34% respectively.

The total secondary market Treasury bond transacted volume for 12 June 2017 was Rs. 3.27 billion.

In money markets, the OMO (Open Market Operations) Department of the Central Bank of Sri Lanka was seen injecting an amount of Rs. 7.64 billion on an overnight basis by way of a Reverse Repo auction at a weighted average of 8.75% as the net liquidity in the system stood at a deficit of Rs. 7.38 billion. The overnight call money and repo rates averaged 8.75% and 8.82% respectively.

Rupee loses marginally   

The USD/LKR rate on spot next contracts depreciated marginally to close the day at levels of Rs. 152.95/00 against its previous day’s closing levels of Rs. 152.85/90 on the back of importer demand.

The total USD/LKR traded volume for 12 June 2017 was $ 112.00 million.

Some of the forward USD/LKR rates that prevailed in the market were one month - 154.05/15; three months - 156.10/20 and six months - 158.90/00.