Primary auction rates continue to dip to new historical lows

Thursday, 31 July 2014 00:27 - - {{hitsCtrl.values.hits}}

3-month WAvg dips to lowest level since 1976 while 6 and 12 months dip to lowest since 1989 Sustained demand saw weighted averages decreasing further at yesterday’s weekly Treasury bill auction to record historical low levels since 1976.

The weighted average on the 182 day bill was seen dipping by seven basis points to below CBSL’s Standing Deposit Facility Rate (SDFR) of 6.50% for the first time in 45 months to record 6.47% while the 91 day bill dipped as well by seven bp to 6.36%. Once again it was the 364 day bill which reflected the sharpest decline of 10 basis points to 6.58% as it continued to dominate the auction by representing 80% of the total accepted amount. Interestingly, the total amount accepted at the auction was equal to the initial total offered amount for the first time in 34 weeks which was at Rs. 15 b. Meanwhile, in secondary bond markets, the bullish sentiment was further sustained yesterday, due to the outcome of the Treasury bill auction. The overall yield curve continued to shift downwards as activity remained high. The yields on the liquid 1 July 2019 and 1 July 2022 maturities were seen hitting intraday lows of 7.32% and 8.04% respectively against its previous day’s closing levels of 7.42/45 and 8.08/10. In addition, the two 2018 maturities (i.e. 1 April 2018 and 15 August 2018) and two 2029 maturities (i.e. 1 January 2029 and 1 May 2029) were seen closing the day at levels of 7.15/18, 7.20/22, 9.40/43 and 9.41/44 respectively against their previous days closings of 7.20/25, 7.28/33, 9.43/48 and 9.45/50 respectively subsequent to hitting intraday lows of 7.15%, 7.18%, 7.40% and 7.43%. Furthermore, the 01.05.2021 maturity was seen changing hands within the range of 7.83% to 7.88% while on the shorter end of the curve, 2016 maturities were seen changing hands within the range of 6.65% to 6.70% and 2017’s within 6.93% to 6.97%. Buying pressure on secondary market bills post auction saw the 364 day bill change hands within the range of 6.55% to 6.58% while the 182 day bill was quoted at 6.43/47. Meanwhile in money markets, overnight call money and repo rates remained steady to average 6.71% and 6.54% respectively as overall surplus liquidity stood at Rs. 27.95 billion. The total amount was deposited at Central Bank’s Standing Deposit Facility Rate (SDFR) of 6.50% as no Open Market Operations (OMO) were conducted yesterday.

Rupee remains steady

In Forex markets, the USD/LKR rate remained steady to close the day at Rs. 130.21/130.22 as markets were at equilibrium. The total USD/LKR traded volumes for 28 July stood at $ 61.18 million. Some of the forward dollar rates that prevailed in the market were: one month – 130.45; three months – 131.12; and six months – 132.12.