Secondary market bond yields increase marginally in thin trade
Friday, 22 November 2013 07:03
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By Wealth Trust Securities
Activity in secondary bond markets was mainly witnessed in morning hours of trading yesterday ahead of yesterday’s annual budget reading. Yields were seen increasing on the back of thin volumes due to most market participants adopting a wait and see approach, mainly on the 01.04.16, 01.01.17 and the liquid two 2018’s (i.e. 01.04.2018 and 15.08.2018) maturities to daily highs of 10.42%, 10.84%, 11.16% and 11.30% respectively against its previous day’s closing levels of 10.35/40, 10.77/80, 11.08/10 and 11.20/22.
However, buying interest at these highs saw yields dip once again to settle at levels 10.40/45, 10.82/86, 11.12/14 and 11.24/28 towards the latter part of the day. In addition, the two year maturity of 15.07.15 was seen increasing as well to levels of 10.10% once again and closed the day at 10.10/15.
Nevertheless, continued buying interest on secondary market bills saw January 2014 bills change hands within the range of 8.25% to 8.35%, May 2014 within 8.75% to 8.85%, October within 9.60% to 9.65% and the latest 364-day bill at 9.65%.
The Open Market Operations (OMO) department of Central Bank continued to mop up liquidity on a seven day basis for an amount of Rs. 11.485 billion at a weighted average of 7.465% while a further Rs. 9.44 billion was deposited at its widow rate of 6.50%. This in turn helped overnight call money and repo rates hold steady to average 7.75% and 7.07% respectively as surplus liquidity increased to Rs. 20.925 billion yesterday.
Spot next contracts loses value
In USD/LKR markets, spot next contracts (26th November) were seen dipping to an intraday low of Rs. 131.32 yesterday on the back of thin volumes from its opening levels of Rs. 131.22 to close the day at Rs. 131.32/35.
However, the rate on all other contracts (i.e. cash, tom and spot) remained steady at levels of Rs. 131.08/10, Rs. 131.09/10 and Rs. 131.10/15 as market participants stayed away from transacting on these contracts. The total USD/LKR traded volume for the previous day (20-11-13) stood at $ 44.77 million.
Some of the forward dollar rates that prevailed in the market were 1-Month: Rs. 132.00; 3-Months: Rs. 133.85 and 6-Months: Rs. 135.85.
