Secondary bond market activity picks up ahead of weekly auction

Wednesday, 11 September 2013 00:01 - - {{hitsCtrl.values.hits}}

By Wealth Trust Securities Activity in secondary bond markets picked up yesterday mainly on short tenure bills, the two-year and five-year bond maturities ahead of today’s weekly Treasury bill auction. At today’s auction, the Public Debt Department (PDD) of Central Bank reduced the total amount on offer to Rs. 8 billion against its previous weeks offered amount of Rs. 9 b with Rs. 1 b each on the 91 day and 182 day maturities and Rs. 6 b on the 364-day maturity. At last week’s auction, weighted averages remained unchanged against its previous week’s levels for the first time in 28 weeks at 8.61%, 9.64% and 10.56%

respectively. In secondary bond markets, activity was witnessed on the liquid five-year maturity within a thin range of 11.98% to 12.00% while two year maturities were seen changing hands within the range of 11.32% to 11.38%. In addition, on the very shorter end of the yield curve, January 2014 bills were seen being quoted within the range of 9.90% to 10.05%, July bills at levels of 10.55% to 10.58% and August bills at levels of 10.57% to 10.65%. Overnight call money and repo rates remained steady to average 8.59% and 8.10% respectively as surplus liquidity in money markets remained at Rs. 12.44 b yesterday. The Open Market Operations (OMO) department of the Central Bank was seen mopping up an amount of Rs. 5 b on an overnight basis by way of a Repo auction at a WAvg of 7.15% while a further Rs. 1 b was mopped up for a period of seven days at a WAvg of 7.95% as well. In addition, an amount of Rs. 6.44 b was seen been deposited at CBSL’s Repo window of 7.00%. Rupee appreciates The rupee on liquid spot next/next contracts (four working days ahead) as well as on spot next contracts and tom contracts appreciated yesterday to levels of Rs. 132.91/94, Rs.132.88/92 and Rs.132.85/87 respectively against its yesterday’s closing levels of Rs.133.10/15, 133.05/10 and 132.99/00. Export conversions outweighing importer demand was seen as the reason behind the appreciation, according to market sources. The total USD/LKR traded volume for the previous day (9 September 2013) stood at US$ 28.80 million. Some of the forward dollar rates that prevailed in the market were: one month – 133.83; three months – 135.65; and six months – 138.20.