Primary market weighted averages continue to plunge at weekly auction

Thursday, 17 July 2014 01:21 - - {{hitsCtrl.values.hits}}

By Wealth Trust Securities Secondary market bond yields follow suit Considerable buying interest at yesterday’s weekly Treasury bill auction saw weighted averages (WAvgs) continue its downward spiral, with the 364 day bill reflecting its sharpest drop in 26 weeks to hit a low of 6.79% in comparison to its previous weeks WAvg of 6.91%. This was closely followed by the 91 day and 182 day maturities as it reflected dips of three basis points and four basis points respectively to 6.46% and 6.59%. Once again, the 364 day maturity continued to dominate the auction as it represented 89% of the total accepted amount of Rs. 18.3 billion against its initial total offered amount of Rs. 10 b.

The expectations and final outcome of the weekly auction drove secondary market bond yields further down yesterday, mainly driven by the five-year maturity of 1 July 2019 and the eight-year maturity of 1 July 2022 to daily lows of 7.85% and 8.82% respectively against its opening highs of 8.03/06 and 8.98/00.

In addition, the nine-and-a-half year maturity of 01st January 2024 was seen dipping to an daily low of 9.05% as well against its opening highs of 9.18/22 while yields on the 15-year maturity of 1 May 2029 was seen dipping to 10.30% against its highs of 10.45%. Furthermore, on the shorter end of the yield curve, the 15 May 2017 maturity was seen changing hands within the range of 7.30% to 7.40% and the two 2018s (1 April 2018 and 15 August 2018) within 7.60% to 7.75% and 7.65% to 7.80% respectively. The 364 day bill was quoted at levels of 6.70/75 post auction. In money markets, surplus liquidity remained high at Rs. 47.11 b as overnight call money and repo averages were seen dipping marginally once again to 6.75% and 6.50% respectively yesterday. The Open Market Operation (OMO) department of the Central Bank was seen refraining from conducting any auctions yesterday. Rupee remains broadly steady The rupee was seen closing the day broadly steady at Rs. 130.20/21 yesterday as markets were at equilibrium. The total USD/LKR traded volumes for 15 July stood at $ 78.33 million. Some of the forward dollar rates that prevailed in the market were: one month – 130.34; three months – 130.91; and six months – 131.91.