Secondary market bond yields dip on renewed buying interest ahead of weekly auction

Wednesday, 16 July 2014 00:00 - - {{hitsCtrl.values.hits}}

By Wealth Trust Securities Liquidity increases to a five month high Renewed buying interest along the yield curve in line with yesterday’s bond maturity of Rs. 92.52 billion saw secondary market bond yields dip yesterday ahead of today’s weekly Treasury bill auction. Activity centered on the liquid maturities of 1 July 2019 and 1 July 2022 as its yields were seen hitting intraday lows of 8.05% and 8.98% respectively against its days opening highs of 8.12% and 9.12% as activity remained very high.

In addition, moderate volumes on the liquid two 2018s (i.e. 01.04.2018 and 15.08.2018) were seen changing hands within the range of 7.80% to 7.86% and 7.85% to 7.90% respectively followed by the seven year maturity of 01.05.2021 within the range of 8.72% to 8.75% and the nine and a half year maturity of 01.01.2024 within 9.24% to 9.28%. At today’s auction, a total amount of Rs. 10 billion will be on offer consisting of Rs. 1 billion each on the 91-day and 182-day maturities and Rs. 10 billion on the 364-day maturity. At last week’s auction, weighted averages were seen dipping by 1 basis point (bp), 5 bp and 6 bp on the three maturities respectively to 6.49%, 6.63% and 6.91%. In secondary bill markets, the 91-day bill was seen changing hands within the range of 6.50% to 6.52% while the 364 day bill was quoted at 6.80/85. Surplus liquidity increases to a five month high Surplus liquidity in money markets was seen increasing to a five month high of Rs. 73.35 billion yesterday following the Rs. 92.52 billion bond maturity. The Open Market Operation (OMO) department of Central Bank was seen mopping up an amount of Rs. 24 billion from the system by way of a three-day term repo auction at a weighted average of 6.50% as overnight call money and repo averages were seen dipping marginally to 6.84% and 6.52% respectively. Rupee continues appreciation trend Export conversions outweighing importer demand coupled with a further narrowing down of forward dollar premiums saw the USD/LKR rate gain by 1 cent yesterday to close the day at Rs. 130.19/20, continuing its appreciation trend. The total USD/LKR traded volumes for 11 July 2014 stood at US$ 100.85 million. Some of the forward dollar rates that prevailed in the market were one month – 130.41; three months – 130.95 and six months – 131.90.