Secondary market bond yields dip ahead of Treasury bond auctions

By Wealth Trust Securities

Activity in secondary bond markets increased yesterday, as yields were seen seesawing but eventually closing the day lower than its previous trading day’s closings. 

Selling interest in the morning hours of trading saw yields on the liquid maturities of 01.06.2018, 01.07.2019, 15.09.2019, 01.08.2021 and 01.09.2023 increase to intraday highs of 7.95%, 8.20%, 8.25%, 8.65% and 8.85% respectively. However, considerable buying interest from this point onwards saw yields dip to hit intraday lows of 7.92%, 8.10%, 8.08%, 8.52% and 8.74%.

Meanwhile, today’s bond auctions will have on offer of Rs. 5 billion each on a 4.01-year maturity of 1 July 2019 and a 6.02-year maturity of 1 August 2021. In secondary bill markets, November 2015 bills were quoted at levels of 6.10/15.

Meanwhile, in money markets, overnight call money and repo rates remained steady to average 6.12% and 6.04% respectively as surplus liquidity remained high at Rs. 119.54 b yesterday.

Rupee remains steady

The USD/LKR rate on its active one-month and two-month forward contracts remained mostly unchanged to close the day at levels of Rs. 134.70/90 and 135.60/80 as markets were at equilibrium. The total USD/LKR traded volume for 8 May was at $ 46.50 million. Some of the forward dollar rates that prevailed in the market were 3 months - 136.20/30 and 6 months - 137.90/10.