Primary and secondary market yields increase ahead of bond auctions

By Wealth Trust Securities

The upward trend in weighted averages at the weekly Treasury bill auctions continued yesterday as well, with the 364 day bill increasing the most by eight basis points to 10.55% closely followed by the 91 day and 182 day bills by six and five basis points respectively to 9.22% and 10.12% respectively. 

A total amount of Rs. 21.7 billion was accepted at the auction against its initial total offered amount of Rs. 25.5 billion.

In the secondary bond market yesterday, yields were seen increasing mainly on the 01.07.19 and the 01.05.21 maturities to intraday highs of 12.05% and 12.55% respectively against its previous day’s closing levels of 11.95/00 and 12.41/43 on the back of selling interest. In addition, activity was witnessed on the 01.05.2020 maturity at a high of 12.35% while 2018 maturities of 01.04.18, 15.06.18 and 15.08.18 were seen recording highs of 11.20%, 11.40% and 11.45% respectively on the back of foreign selling interest. This was ahead of today’s Treasury bond auctions, where a total amount of Rs. 16.5 billion will be on offer consisting of four maturities. The 1.11 year maturity of 15.01.2019 will have on offer Rs. 1.5 billion while the 4.10 year maturity of 15.12.2021, the 7.05 year maturity of 01.08.2024 and the 9.05 year maturity of 01.08.2026 will have Rs. 5.0 billion each on offer.

Meanwhile, in money markets, the overnight call money and repo rates increased to average 8.45% and 8.54% respectively as the net liquidity shortfall stood at Rs. 2.18 billion. The OMO department (Open Market Operations) of the Central Bank of Sri Lanka refrained from conducting any auction for a fourth consecutive day.

Rupee dips marginally   

In Forex markets, the USD/LKR rate on active two weeks and one month forward contracts depreciated marginally yesterday to close at Rs. 151.20/25 and Rs. 151.65/70 respectively against its previous day’s closing levels of Rs. 151.15/20 and Rs. 151.56/59 on the back of importer demand and foreign selling in rupee bonds.

The total USD/LKR traded volume for 13 February 2017 was $ 78.29 million.

Some of the forward USD/LKR rates that prevailed in the market were three months - 153.55/70 and six months - 156.25/30.