Four-year bond yield hits 32 month low ahead of Treasury bond auctions

Tuesday, 27 May 2014 01:30 - - {{hitsCtrl.values.hits}}

By Wealth Trust Securities The secondary market for Treasury bonds continued its bullish trend yesterday as yields were seen dipping further mainly driven by the liquid

two 2018 maturities (i.e. 1 April 2018 and 15 August 2018) to a 32-month low of 8.40% and 8.50% respectively and the 1 July 2019 maturity to a three-month low of 8.91% against its previous day’s closing levels of 8.45/48, 8.55/60 and 8.94/96. This was ahead of today’s Treasury bond auction, the first in nearly two months for a total amount of Rs. 5 billion consisting of Rs. 1 billion on the 1 July 2019 maturity and Rs. 2.0 billion each on the 1 January 2019 and 1 June 2044 maturities which pay semi-annual coupons of 10.60%, 13.00% and 13.50% respectively. Furthermore, durations of 2015, 2016 and 2017 maturities continued to derive heavy demand changing hands within the range of 7.15% to 7.22%, 7.35% to 7.56% and 7.98% to 8.05% respectively. Meanwhile in money markets, overnight call money and repo rates averaged 6.94% and 6.51% respectively as surplus liquidity in money market stood at Rs. 20.31 b yesterday. The Open Market Operations (OMO) department of Central Bank was seen mopping up an amount of Rs. 14.50 b on a four day basis at a WAvg of 6.61% while a further amount of Rs. 5.81 b was deposited at its Standing Deposit Rate (SDR) of 6.50%. Rupee gains marginally The rupee was seen gaining marginally yesterday to close the day at Rs. 130.37/42 subsequent to gaining to a daily high of Rs. 130.35 on the back

of the strong external sector performance announced yesterday. The total USD/LKR traded volume for the previous day (23 May 2014) stood at $ 82.17 million. Some of the forward dollar rates that prevailed in the market were: one month – 130.87; three months -131.85; and six months – 133.27.