Positive momentum continues in bond markets for a third consecutive week

Wednesday, 16 April 2014 02:12 - - {{hitsCtrl.values.hits}}

By Wealth Trust Securities The successful launch and attractive pricing of Sri Lanka’s seventh sovereign dollar bond issue during the early part of the week ending 11 April 2014 saw activity in secondary bond markets increase as market sentiment remained bullish. This was further supported by the decline in weighted

averages at the two Treasury bill auctions held during the week for a 29th consecutive week. Secondary market yields were seen declining considerably led by the liquid two 2018 maturities (i.e. 01.04.2018 & 15.08.2018), the 01.07.2019 maturity and the 01.05.2021 maturity to weekly lows of 8.69%, 8.80%, 8.98% and 9.80% respectively against its last week’s closing levels of 8.77/80, 8.87/91, 9.11/14 and 9.90/95. The overall yield curve witnessed a parallel shift downwards during the week, with the shorter tenure maturity of 01.01.15 changing hands within the range of 7.35% to 7.55% and the 364-day bill changing hands at levels of 7.00% to 7.03% as well in secondary markets.

Meanwhile the second Treasury bill auction held on Friday due to the present week consisting of only two working days, recorded dips of 01 basis point each on its weighted averages to 6.79% and 7.03% respectively on the 182-day and 364-day maturities while weighted average on the 91-day dipped by 02 basis points to 6.61%. Interestingly, the accepted amount on the 182-day bill was higher than the market favourite 364-day bill for the first time in eight weeks while the total accepted amount was marginally higher by only Rs. 0.49 billion against its initial total amount of Rs. 10 billion. In money markets, overnight call money and repo rates remained steady throughout the week, to average 6.97% and 6.54%, as surplus liquidity increased to a high of Rs. 22.51 billion on Friday from its weekly low of Rs. 6.9 billion. Liquidity was drained out by way of repo auctions during the week, for durations ranging from overnight to 77 days at WAvgs of 6.52% to 6.81%. Rupee closes the week steady The rupee was seen deprecating to a weekly low of Rs. 130.70 during the beginning of the week on the back of import demand and equity out flows. However it bounced back to hit a weekly high of Rs. 130.58 on the back of the success of the sovereign dollar bond issue and seasonal remittances before closing steadily at levels of Rs. 130.60/62 in comparison to its previous weeks closings. The daily average USD/LKR traded volume for the first four days of the week was at $ 60.15 million. Some of the forward dollar rates that prevailed in the market were 1-Month: Rs. 131.19, 3-Months: Rs. 132.26 and 6-Months: Rs. 133.76.