Impressive primary auction results ignite secondary bond markets during the week

Monday, 16 March 2015 00:12 - - {{hitsCtrl.values.hits}}

Significant demand witnessed at auctions Considerable parallel shift upwards on the yield witnessed during the week Liquidity increases to a six week high By Wealth Trust Securities Driven by the outcome of the primary auctions (Treasury bills and Treasury bonds) conducted during the week ending 13 March, significant demand saw a total amount of Rs. 121.8 billion been accepted against a total offered amount of Rs. 70 billion, while the recorded weighted averages resulted in a considerable parallel shift upwards on the overall yield curve.

In secondary market bond trading, activity was seen increasing substantially during the week as the increasing trend in yields witnessed during the early part of the week was seen reversing towards the latter part of the week to edge down on the back of considerable buying interest by both foreign and local participants. Activity centred the three liquid 2018 maturities (i.e. 1 April 2018, 1 June 2018 and 15 August 2018), the 1 July 2022, the 1 September 2023 and the 15 March 2025 maturity as it was seen changing hands within weekly highs of 8.60%, 8.83%, 8.75%, 9.50%, 9.70% and 10.09% respectively against its weekly lows of 8.35%, 8.37%, 8.60%, 8.93%, 9.50% and 9.95%. Furthermore, continued buying interest in secondary market bills saw the 91 day, 182 day and 364 day bills been quoted at levels of 7.00/10,7.15/25 and 7.20/35 respectively.

Meanwhile in money markets, overnight call money and repo rates decreased during the week ending 13th March to average 6.70% and 6.29% respectively against its previous weeks’ averages of 6.78% and 6.52% as surplus liquidity increased during the week to average at Rs. 78.96 billion while it recorded a six week high of Rs. 96.38 billion on Friday 13 March. Rupee closes the week steady In Forex markets, the USD/LKR rate on one week forward contracts remained steady to close the week at Rs. 133.60/133.65 while spot and spot next quotes remained stagnant at 132.90/20 and 132.92/20 respectively. The daily average USD/LKR traded volume for the first four trading days of the week stood at $ 39.67 million. Some of the forward dollar rates that prevailed in the market were: one month – 134.20; three months – 135.40; and six months – 137.40.