Secondary market bond yields pick up with fresh liquidity

Monday, 17 September 2012 01:50 - - {{hitsCtrl.values.hits}}

The downward movement of bond yields experienced in the secondary market fuelled by Wednesday’s Treasury bill auction results which remained unchanged came to a halt with the rates even picking up marginally. A decline in market liquidity with the CBSL adding Rs. 3.0 billion at a rate of 9.64% through its open market operations resulted in a marginal increase in the bond yield and considerable selling pressure.

The short tenure 18 months bond and three year bond reflected the highest increase of five basis points and four basis points respectively at an intraday high of 13.71 % and 13.91% respectively. In addition the four year maturity increased by three basis points as well to an intraday high of 14.11% whilst the five year maturity traded in the range of 14.17% to 14.20%.

Meanwhile liquidity in the market moved into a net deficit of Rs. 3.656 billion. An amount of Rs. 0.87 billionwas borrowed by market participants at Central Bank’s discount window rate of 9.75% while an amount of Rs. 0.214 billion was invested at its Repo window rate of 7.75%. However overnight call money and repo rates remained steady to average 10.47% and 9.60% respectively.

In the Forex markets the USD/LKR rate depreciated marginally by 15 cents yesterday to Rs. 132.17 against its previous day’s closing level of Rs. 131.99. However morning trades saw the rupee dip to an intraday low of Rs. 132.25 on the back of demand for contracts value (17/09/12). Given below are some forward dollar rates that prevailed in the market, one month - 133.48; three months- 136.10 and six months- 139.98. Source: Wealth Trust Securities.