Primary market bond yields spike ahead of weekly bill auction

By Wealth Trust Securities

The upward momentum in secondary market bond yields continued yesterday driven by the outcome of the Treasury bond auctions. At the auction, the 4.08 year maturity of 01.05.2020 recorded a weighted average (W.Avg) of 9.65% reflecting an increase of 30 basis points (bp) against its previously recorded W.Avg while the 8.00 year maturity of 01.09.2023 recorded a weighted average of 10.25% reflecting an increase of 49 bp against its previous W.Avg. In addition the 14.08 year maturity of 15.05.2030 recorded a W.Avg of 10.96% while all bids received for the 10.09 year maturity of 01.06.26 was rejected.

In secondary market bonds, selling interest leading to the auction and following it saw yields on the liquid maturities of 01.07.19 and 01.09.23 increase to intraday highs of 9.45% and 10.25% respectively against its days opening lows of 9.28% and 10.15% while yields on the 01.06.26 maturity remained unchanged at 10.40%, at where it was seen changing hands. On the shorter end of the yield curve, 2017 durations continued to change hands within the range of 7.95% to 8.30%. This was ahead of today’s weekly Treasury bill auction, at where a total amount of Rs 24 billion will be on offer consisting of Rs.6 Bn on the 91 day, Rs.8 Bn on the 182 day and Rs.10 Bn on the 364 day maturities respectively. At last week’s auction, weighted averages on all three maturities increased by more than 20 basis points across the board to register 6.79%, 7.07% and 7.17% respectively. 

In money markets yesterday, overnight call money and repo rates decreased marginally to average 6.34% and 6.30% respectively as surplus liquidity stood at Rs. 60.47 billion.

 Rupee dips further

Meanwhile in Forex markets yesterday, continued importer demand saw the USD/LKR rate on spot contracts depreciate further to close the day at Rs.138.30/45 against its previous day’s closing of Rs 137.75/90. The total USD/LKR traded volume for the 07th of September 2015 was US $ 22.25 million. Some of the forward USD/LKR rates that prevailed in the market were 1 Month - 139.00/25; 3 Months - 140.30/50 and 6 Months - 141.75/00.