Secondary market bond yields increase during the week

Monday, 8 July 2013 00:02 - - {{hitsCtrl.values.hits}}

By Wealth Trust Securities The bullish sentiment in secondary bond market witnessed during the previous week (Week ending 28th June) following the 200 basis points cut on the Statutory Reserve Requirement (SRR) for all commercial banks in Sri Lanka came to halt with the weighted averages at the weekly Treasury bill auction remaining unchanged on the 182 day and 364 day maturities.

In secondary bond markets the liquid two five year bond maturities (i.e. 01.04.2018 and 15.08.2018) saw its yields increase during the week to weekly highs of 11.42% and 11.46% respectively from its previous week’s closings of 11.27% and 11.35% on the back of more selling interest by market participants. In addition, the eight year maturity was seen been traded within the range of 11.55% to 11.60% during the week. However, demand for the 364 day bill in secondary markets saw it change hands within the range of 10.58% to 10.62% subsequent to the auction. Liquidity increases to a two month high As expected, excess liquidity in money markets spiked to a two month high and remained high during the week to average Rs 36.44 Bn following the SRR cut with effect from 01st of July 2013. However overnight call money and repo rates continued to remain steady despite the surge in liquidity at weekly averages of 8.70% and 8.21% respectively as the Open Market Operations (OMO) department of Central Bank was seen mopping up liquidity on a daily basis at weighted averages of 7.78% to 7.80%. In addition, a total amount of Rs 3 Bn was mopped up on a term basis as well from outright sales of Treasury bills for durations of 28 days, 42 days and 49 days at weighted averages of 8.17%, 8.35% and 8.40% respectively

Rupee holds steady The rupee traded within a thin band of Rs 130.55/130.60 throughout the week with volumes traded on the 02nd of July recording a weekly high of US $ 74.40 million. The daily USD/LKR average traded volume for the first four days of this week stood at US $ 54.67 million.