Momentum shifts as 364-day bill hits 6%

Thursday, 16 October 2014 00:31 - - {{hitsCtrl.values.hits}}

All bids received for 91-day bill and 182-day bill rejected once again
Secondary market bond yields increase for a second consecutive day

By Wealth Trust Securities A shift in momentum was witnessed in secondary bond markets yesterday as the weighted average on the 364-day bill increased by 11 basis points to 6.00% at its weekly Treasury bill auction held yesterday. However, all bids received for the 91-day bill and the 182-day bill were rejected once again.

An amount of Rs. 14.7 billion was accepted in total on the 364-day maturity against its initial offered amount of Rs. 5.0 billion, reflecting its highest positive difference (accepted amount/offered amount) in 13 weeks. In line with the outcome of the bill auction, secondary market bond yields were seen increasing across the board as activity picked up. It was the two liquid maturities of 1 July 2022 and 1 January 2024, which reflected the highest amount of activity as its yields were seen increasing by around 80 basis points and 55 basis points respectively to intraday highs of 8.45% and 8.50% against its previous day’s closing levels. Furthermore, the 15.05.17 maturity and the two 2018 maturities (i.e. 1 April 2018 and 15 August 2018) were seen changing hands within daily lows of 6.80% to highs of 7.15% and 6.95% to 7.30% respectively while the 1 May 2021 maturity was traded within the range of 7.50% to 8.05%. However, buying interest at these levels saw yields close the day marginally lower once again. In secondary market bills, the 364 day bill closed the day at 6.00/05, subsequent to changing hands at levels of 6.05% to 6.15% post auction. Meanwhile in money markets, the decreasing trend witnessed on overnight call money and repo rates continued yesterday as well to average at 6.05% and 5.70% respectively as surplus liquidity remained high at Rs 32.97 Bn. The full amount was seen been deposited at Central Bank’s Standing Deposit Facility rates of 5.00% and 6.50% as the Open Market Operations (OMO) department of Central Bank refrained from conducting any auctions.

Rupee dips further The rupee on spot next contracts dipped further yesterday to close the day at Rs. 130.80/90 on the back of importer demand. The total USD/LKR traded volume for 14 October was at $ 40.65 million. Some of the forward dollar rates that prevailed in the market were: one month – 131.26; three months – 132.08; and six months – 133.08.