Rupee bond markets turn bullish following NSB dollar bond issue

Monday, 16 September 2013 00:05 - - {{hitsCtrl.values.hits}}

By Wealth Trust Securities The much-awaited National Savings Bank (NSB) dollar bond issue, at which it was successful in raising an amount of US $ 750 million, saw secondary market bond yields reverse an upward trend it had witnessed over the past three weeks towards the latter part of the week ending 13 September 2013.

Once again, bulk of the activity continued to surround the liquid two, two year maturities (i.e. 15 March 2015 and 15 July 2015) and five year maturities (i.e. 1 April 2018 and 15 August 2018) as it was seen hitting weekly lows of 11.25% and 11.30% on the two years and 11.84% and 11.90% on the five year maturities respectively following the results of the dollar bond issue against its weekly highs of 11.35% and 11.40% on the two year and 12.00% and 12.05% on the five years. In addition, considerable buying interest was witnessed in secondary bill markets as well, with January 2014 bills changing hands within the range of 9.90% to 10.00%, June 2014 bills within the range of 10.50% to 10.54% and July 2014 bills within the range of 10.53% to 10.55%. This was following the weekly Treasury bill auction, at which weighted averages remained steady for a third consecutive week at 8.61%, 9.64% and 10.57% respectively on the 91day, 182 day and 364 day maturities. Meanwhile in money markets, weekly averages on overnight call money and repo rates remained steady to average 8.58% and 8.10% respectively as surplus liquidity in markets ranged between Rs. 12 billion to Rs. 16 billion. Furthermore, surplus liquidity in money

markets is expected to increase further by next week on expectation of a part or full component of the dollar bond issue to be converted. Meanwhile the Open Market Operations (OMO) department of Central Bank conducted daily and seven day repo auctions during the week in order to drain out excess liquidity from the system at steady weighted averages of 7.14/18 and 7.94/97 respectively. Rupee gains to a three-week high

The successful NSB dollar bond issue following the Sri Lankan Development Bond (SLDB) issue to the tune of US$ 209 million the previous week saw the USD/LKR rate gain to a three week high of Rs. 131.85 on Friday. However, importer demand at these levels saw the rupee close the week at levels of Rs. 132.20/25. The daily average USD/LKR traded volume for the first four days of the week was at US$ 33.12 million. Some of the forward dollar rates that prevailed in the market were: one month– 133.08; three months – 134.98; and six months – 137.53.