Secondary market bond yields dip for the first time in eight days

Monday, 28 January 2013 00:00 - - {{hitsCtrl.values.hits}}

By Wealth Trust Securities

Secondary market Treasury bond yields dipped for the first time in eight days on Thursday, as a total of Rs. 45 billion was on offer for the third bond auction of the year due on 29 of January. On offer are Rs. 10 billion, Rs. 25 billion and Rs. 10 billion on the five year (01.06.18), eight year (01.05.21) and 15 year (01.07.28) maturities respectively.

The dip in yields was mainly driven by the two five year maturities (i.e. 01.04.18 and 15.08.18) as it opened Thursday at an intraday day high level of 11.40/45% and dipped to an low of 11.00/05%. However profit taking coupled with selling pressure at these levels saw its yields increase once again marginally, to close the day at levels of 11.05/10%.

Interestingly, the yield curve was showing signs of reflecting an inversion once again as the longer tenure maturities were seen trading below the 364 day bill level of 11.10% to 11.15%. Given below are the closing, secondary market yields for the most frequently traded maturities:

Meanwhile in money markets, Central Bank’s Open Market Operations (OMO) department continued to mop up liquidity on an overnight basis by way of a Repo auction as it drained Rs. 28.2 billion at a weighted average of 8.44%. A further Rs. 3.7 billion was deposited at CBSL’s repo window of 7.50%. This led to overnight call money and repo rates remaining stable to average 9.62% and 8.86% respectively.

However all bids were rejected for the sale of outright bills (11 days and 18 days) yesterday, a first of such an auction since August 2012, a tool mainly used to drain liquidity further.

Rupee remains above Rs. 127

The rupee remained stable at levels of Rs. 127-Rs.127.10 on Thursday as volumes traded remained rather moderate. The total USD/LKR traded volume for the previous day (23.01.13) stood at US $ 56.75 million. Given below are some forward dollar rates that prevailed in the market: one month – 128.05, three months – 129.94 and six months – 132.39