Positive momentum in Bond markets continues

Monday, 30 March 2015 00:05 - - {{hitsCtrl.values.hits}}

Primary market W.Avgs continue declining trend Secondary market yields seesaw during the week By Wealth Trust Securities The momentum in secondary Bond markets remained positive during the week ending 27 March, driven by the bullish outcome of the primary auctions. The weighted averages (W.Avgs) on the 91 day, 182 day and 364 day Bills declined by a further 19, 17 and 19 basis points (bp) respectively at its weekly Treasury Bill auction to record total deductions of 51, 61 and 57 bp respectively over the past two weeks. This intern helped weighted average on the two Treasury bond auctions to dip as well, led by the 15 September 2019 maturity by 21 bp to 8.92% and the 1 September 2023 maturity by 06 bp to 9.73%. Activities in secondary bond markets remained very high during the week, as yields were seen fluctuating within a wide band of 40 basis points on certain durations.

The liquid maturities of 1 June 2018, 15 September 2019, 1 August 2021, 1 July 2022 and 1 September 2023 were seen changing hands within weekly lows of 8.24%, 8.45%, 8.72%, 8.90% and 9.30% respectively against its highs of 8.62%, 8.90%, 9.00%, 9.10% and 9.70%. In addition, on the longer end of the yield curve, a limited amount of activity was witnessed on the 15 March 2025 and the 15 March 2035 maturities within the range of 10.00% to 10.05% and 10.78% to 10.85% respectively. Furthermore, the Public Debt Department (PDD) of Central Bank announced its plans to conduct two further Treasury bond auctions today (30 March), totalling Rs. 25 billion consisting of Rs. 5.0 billion on a 5.02-year maturity of 1 June 2020 and Rs. 20 billion on a 10-year maturity of 15 March 2025.

Meanwhile in money markets, overnight call money and repo rates decreased during the week to average 6.63% and 6.66% respectively against its previous week’s averages of 6.69% and 6.73% as surplus liquidity remained high during the week to average at Rs. 98.37 billion. The Open Market Operations (OMO) Department of Central Bank was seen mopping up excess liquidity by way of four auctions for outright sales of Treasury Bills. The auction drained an amount of Rs. 20 billion in total at weighted average of 6.07% for 04 days, 6.26% for 25 days, 6.40% for 32 days and 6.45% for 53 days. Rupee gains ground marginally during the week The rupee on two week forward contracts appreciated during the week to close the week at Rs. 130.70/75 against its last week’s closing levels of Rs. 133.85/95 on the back of foreign remittances and foreign buying in rupee Bonds. The daily average USD/LKR traded volume for the first four trading days of the week stood at $ 37.73 million. Some of the forward dollar rates that prevailed in the market were: one month – 134.15; three months – 135.30; and six months – 136.80.