Secondary market bond yields dip ahead of weekly auction

By Wealth Trust Securities

The successful issue and attractive pricing on Sri Lanka’s first sovereign dollar bond issue for the year 2016, led to secondary market bond yields dipping for a fifth consecutive day. Activity remained high as yields on the belly end of the curve comprising of the maturities of 01.01.24, 15.03.25 and 01.06.26 were seen dipping to intraday lows of 12.00%, 12.10% and 12.15% respectively against its opening highs of 12.10%, 12.20% and 12.25%. On the short end of the curve, the 15.09.19, 01.03.21 and 01.10.22 maturities were seen changing hands within daily lows of 11.47%, 11.75% and 11.85% respectively to highs of 11.50%, 11.80% and 11.92% while 2018 maturities continued to change hands within the range of 11.00% to 11.05% as the downward trend was curtailed on the back of profit taking.

At today’s weekly Treasury bill auction, a total amount of Rs. 23 billion will be on offer consisting of Rs. 8.0 billion on the 91 day, Rs. 9.0 billion on the 182 day and Rs. 6.0 billion on the 364 day bill. At last week’s auction, the weighted averages on the 182 day bill and the 364 day bill increased to 9.89% and 10.56% respectively, while the weighted average on the 91 day bill decreased to 8.87%. 

Meanwhile in money markets, the OMO department of Central Bank injected an amount of Rs. 45 billion on an overnight basis by way of a reverse repo auction at a weighted average rate of 7.97% as the net deficit in the system stood at Rs. 50 billion yesterday. The call money and repo rates remained steady to average at 8.21% and 8.04% respectively.

Rupee remains mostly unchanged

 In Forex markets yesterday, the USD/LKR rate closed the day mostly unchanged at Rs. 146.25/40 as markets were at equilibrium. The total USD/LKR traded volume for 11 July 2016 was $ 67.25 million. 

Some of the forward USD/LKR rates that prevailed in the market were 1 Month  - 146.95/10; 3 Months - 148.60/80 and 6 Months - 150.60/80.