Renewed demand sees primary auction yields dip further

Thursday, 10 April 2014 01:40 - - {{hitsCtrl.values.hits}}

By Wealth Trust Securities The positive momentum generated by Sri Lanka’s seventh sovereign dollar bond issue coupled with renewed demand for shorter tenure maturities reflected favourably on weighted averages (WAvgs) at yesterday’s weekly Treasury bill auction. The WAvgs on all three tenures dipped by one basis point each to 6.63%, 6.80% and 7.04% respectively on the 91 day, 182 day and 364 day maturities. The market favourite 364 day bill dominated the auction as it represented 90% of the total accepted amount, which was Rs. 5.3 billion more than its initial offered amount of Rs. 5 billion.

Activity in secondary bond markets remained high yesterday as yields dipped marginally once again mainly on the liquid two 2018 maturities (i.e. 1 April 2018 and 15 August 2018), the 1 July 2019 and 1 May 2021 maturities as well to intraday lows of 8.73%, 8.85%, 9.03% and 9.88% respectively against its opening levels of 8.76/79, 8.86/90, 9.05/08 and 9.93/98. In addition, a limited amount of activity was witnessed on the one and a half year maturity of 1 November 2015 within the range of 7.44% to 7.48%. In secondary bill markets the 364 day bill was quoted at levels of 7.00% to 7.04% subsequent to the auction. Meanwhile in money markets, the Open Market Operations (OMO) department of Central Bank was seen draining out an amount of Rs. 11.99 b on a two day basis at a weighted average of 6.52% as surplus liquidity remained high of Rs. 17.17 billion yesterday. This intern helped overnight call money and repo rates remained steady to average 6.98% and 6.53% respectively. Rupee remains stable

The dollar/rupee rate remained mostly unchanged within the range of Rs. 130.58 to Rs. 130.60 yesterday. The total USD/LKR traded volume for the previous day (8 April 2014) stood at $ 96.75 million. Some of the forward dollar rates that prevailed in the market were: one month – 131.19; three months – 132.24; and six months – 133.74.