Long tenure bond yields continue declining trend

Friday, 11 July 2014 01:28 - - {{hitsCtrl.values.hits}}

By Wealth Trust Securities Driven by the outcome of yesterday’s bond auction, secondary market bond yields on long tenure duration continued to slide down, led by durations of seven years to 15 years. At yesterday’s auction, a total amount of Rs. 5.30 billion was accepted against an initial total offered amount of Rs. 4 b. In secondary market bond trading, yields on long tenure duration were seen dipping yesterday with the seven year duration of 1 May 2021 dipping to an intraday low of 8.75%, the eight year duration of 1 July 2022 to a low of 9.06% and the nine and a half-year duration of 1 January 2024 to a low of 9.28% against its opening highs of 8.82/87, 9.12/15 and 9.32/36 respectively. However, yields on the belly end of the curve were seen holding steady, subsequent to hitting intraday highs of 7.89% and 7.92% on the two 2018s (i.e. 1 April 2018 and 15 August 2018) and 9.20% on the two 2019s (i.e. 1 July 2019 and 15 September 2019). In secondary market bills, scarcity of supply saw the latest 364 day bill change hands within the range of 6.80% to 6.85% yesterday while May 2014 maturities were seen changing hands within the range of 6.70% to 6.75% and October 2014 within 6.50% to 6.53%. Surplus liquidity in money markets was seen increasing to Rs. 31.32 b yesterday as overnight call money and repo rates remained

steady to average 6.79% and 6.53% respectively. Furthermore, the Open Market Operations (OMO) department of Central Bank was seen mopping up a total amount of Rs 17.50 Bn yesterday on a term basis via two repo auctions for durations of 35 days and 77 days at weighted averages of 6.65% and 6.74% respectively. Rupee remains steady

The USD/LKR rate was seen closing the day steady at Rs. 130.23/25 yesterday as markets were at equilibrium. The total USD/LKR traded volumes for 9 July stood at $ 116.49 million. Some of the forward dollar rates that prevailed in the market were: one month – 130.40; three months – 130.95; and six months – 132.10.