Secondary market bond yields increase to pre-rate cut levels

• W. Avgs increase over 75 basis points

By Wealth Trust Securities

The upward trend in secondary market bond yields continued yesterday as well as yields were seen increasing to levels last witnessed prior to the April 2015 policy rate cut, driven by the increase in primary market averages. 

At yesterday’s bond auctions, the weighted averages (W. Avgs) were seen increasing by 100 basis points (bp) or 1.00% on the 3.03-year maturity of 15.10.2018 to 8.18% against a similar maturity auctioned on 23 June 2015 and the 8.01-year maturity of 01.09.2023 was seen increasing by 76 bp to 9.58% against a similar maturity auctioned on 29 June 2015. A total amount of Rs. 15.70 billion was accepted at the auction against its initial total offered amount of Rs. 20 billion. 

In secondary bond markets, selling interest on the liquid maturities of 01.08.2021 and 01.09.2023 saw it change hands at highs of 9.30% and 9.70% respectively, following the auction, while the two 2018 maturities (01.06.2018 & 15.10.2018) were seen changing hands within the range of 8.08% to 8.15% and 8.10% to 8.30% respectively. 

Two-way quotes on the rest of the yield curve were seen increasing as well yesterday. Furthermore, today’s weekly Treasury bill auction will see a total amount of Rs. 20 billion on offer consisting of Rs. 4 billion on the 91-day bill and Rs. 8 billion each on the 182-day and 364-day bills respectively. At last week’s auction, weighted averages on the 91-day and 182-day bills were seen increasing by 03 bp and 05 bp respectively to 6.14% and 6.26% while the 364-day remained unchanged at 6.28%. 

Meanwhile, in money markets, overnight call money and repo rates remained unchanged to average 6.18% and 5.91% respectively as surplus liquidity stood at Rs. 63.21 billion yesterday.

Rupee remains steady

The dollar/rupee (USD/LKR) rate on spot contracts remained unchanged to close the day at Rs. 133.80 yesterday. The total USD/LKR traded volume for the previous day (13-07-15) stood at US $ 53.05 million. Some of the forward dollar rates that prevailed in the market were 1 Month - 134.40/50; 3 Months - 135.50/65 and 6 Months - 137.00/21.