Primary market bond averages dip over 100 basis points within five weeks

Friday, 30 September 2016 00:44 - - {{hitsCtrl.values.hits}}

By Wealth Trust Securities

The weighted averages at yesterday’s Treasury bond auctions were seen decreasing over 100 basis points against its averages recorded on 25 August 2016.

The 9.10 year maturity of 01.08.2026 recorded the sharpest decline of 146 basis points to 11.06% followed by the 7.10 year maturity of 01.08.2024 by 128 basis points to 10.96% and the 4.05 year maturity of 01.03.2021 by 115 basis points to 10.61%. All three maturities drew Rs. 20.9 billion in successful bids against its total offered amount of Rs. 22 billion. Given below are the details of the auction.

Activity in secondary bond markets continued to remain high as yields continued to decrease. Buying interest leading to the auction and subsequent to it saw yields on the auction three maturities dip to intraday lows of 10.70%, 10.95% and 11.00% respectively against its day’s opening highs of 11.81%, 11.10% and 11.25%.

However, profit-taking at these levels curtailed the downward movement further. In addition, yields on the 01.10.22, 01.09.23 and the 15.05.30 maturities were seen declining to lows of 11.00%, 11.05% and 11.44% respectively against its highs of 11.06%, 11.10% and 11.55%.

Meanwhile in secondary market bills, durations centering the 364 day maturity were seen trading at levels of 9.90% to 10.00%. Given below are the closing, secondary market yields for the most frequently traded maturities.

In money markets, overnight call money and repo rates averaged at 8.42% and 8.67% respectively as the Open Market Operations (OMO) department of the Central Bank injected an amount of Rs. 23.41 billion at a weighted average of 8.49% by way of an overnight reverse repo auction. The net market deficit stood at Rs. 22.76 billion yesterday.

Rupee dips to a two-month low

The USD/LKR rate continued to slide yesterday to a two-month low on the back of importer demand to close the day at Rs. 146.95/05 on its spot next contract against its previous day’s close of Rs. 146.73/83. Spot contracts were seen closing the day at Rs. 146.85/05. The total USD/LKR traded volume for 28 September 2016 was $ 89.30 million. Given below are some forward USD/LKR rates that prevailed in the market.