Secondary bond market continues to remain active

Monday, 3 March 2014 02:01 - - {{hitsCtrl.values.hits}}

By Wealth Trust Securities As the downward trend in market yields continued, fuelled by a further decrease of the weighted averages at the weekly Treasury bill auction, which attracted a mammoth Rs. 22 billion, the secondary bond market remained active during the early part of the week.

The more liquid two five year maturities (01.04.2018 & 15.08.2018) reflected the highest amount of activity during the week to hit lows of 8.71% and 8.81% in comparison to their last week’s closing levels 8.71/75 an 8.81/85. The yields of the 2019’s (i.e. 15/01/2019 and 01.07.2019) declined as well to 8.90%. However, selling interest towards the later part of the week, subsequent to the results of the Treasury bond auction resulted in yields picking up once again. At the auction Rs. 1 billion each of 01.07.22, 01.01.24 and 01.01.29 were issued at 9.90%, 10.00% and 10.76%. The 01.05.2021 which was quoted at 9.70/80 before the auction was seen edging up to levels of 9.89/92 subsequent to the auction.

In the meantime, inflation for the month of February decelerated marginally to 4.20% on the point to point while the annualized average dipped as well to 6.00%. In the money market, overnight call money and repo rates remained steady throughout, to average 6.96% and 6.44%, as the Central Bank refrained from conducting any cash valued auctions under its Open Market Operations (OMO), expect on Friday where it drained out Rs. 6.66 billion by way of a seven day term repo auction at a weighted average rate of 6.70%. Liquidity closed the week at an increased Rs. 58.65 billion from its weekly low of Rs. 11.76 billion. Despite the CBSL conducting four medium term repo auctions, totalling Rs. 67 billion for durations of 28 days and 77 days, only an amount of Rs. 22.10 billion in total was drained out at weighted average’s ranging from 6.72% and 6.78%.

Rupee appreciates during the week In Forex markets, the USD/LKR rate closed the week considerably higher at Rs. 130.50/60 against its previous week’s closing of Rs. 130.90/00 due to lack importer demand. The daily average USD/LKR traded volume for the first three days of the week was at $ 74.15 million. Some of the forward dollar rates that prevailed in the market were 1-Month: Rs. 131.13, 3-Months: Rs. 132.10 and 6-Months: Rs. 133.50.