Secondary market yields move up ahead of Treasury bond auction and inflation
Friday, 27 February 2015 00:00
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By Wealth Trust Securities
Secondary market bond yields were seen edging up yesterday subsequent to dipping in the morning hours of trading ahead of a bond auction and Inflation due today.
In the morning hours of trading continued buying interest persistent from the previous two days saw yields on the two year-maturity of 15.05.2017, the two three-year maturities (01.04.2018 & 15.08.2018) and the seven-year maturity of 01.07.2022 dip to intraday lows of 6.97%, 7.16%, 7.22% and 7.76% respectively.
However, selling interest from this point onwards saw yields edge up once again to intraday highs of 7.02%, 7.24%, 7.32% and 7.93% during the latter part of the day while buying interest at these levels curtailed any further upward movement. Today’s bond auction, the first for the year 2015, will see an amount of Rs. 1 billion on offer on a 30-year duration of 1 March 2045 which carries a coupon of 12.50%.
In addition, inflation for February is due today as well, whereas for January its point-to-point number increased for a second consecutive month to 3.2% while in annualised average continued to decline for a 20th consecutive month to 3.2%.
In money markets, the Central Bank’s Open Market Operations (OMO) Department was seen mopping up excess liquidity by way of three-term repo auction and three auctions for outright sales of Treasury bills. The term repo auctions drained an total amount of Rs. 50 billion at weighted averages of 5.95% for 14 days, 5.99% for 28 days and 6.00% for 34 days while a further total amount of Rs. 7.87 billion was mopped up for 14, 21 and 42 days at weighted averages of 5.86%, 5.91% and 5.91% respectively through the outright sales. Overnight call money and repo rates remained steady to average 6.01% and 5.61% respectively.
Rupee dips marginally on forward contracts
The USD/LKR rate on one week forward contracts was seen depreciating marginally to Rs. 133.45/55 yesterday against its previous day’s closing of Rs. 133.40/50 while spot and spot next contracts remained stagnant at Rs. 132.90/20 and Rs. 132.92/22 respectively. The total USD/LKR traded volume for 25 February 2015 was at US $ 66.50 million.
Some of the forward USD/LKR rates that prevailed in the market were 1 month - 134.00; 3 months - 134.90 and 6 months - 136.20.
