Specific selling interest sees secondary market bond yields spike; weekly T-bill auction to set dire
Wednesday, 19 March 2014 00:00
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By Wealth Trust Securities
Specific selling interest on the five year bond maturity of 1 July 2019 on the back of considerable volumes saw overall yields increase across the curve in secondary market bond trading yesterday.
The 1 July 2019 maturity which was at levels of 9.05/15 at the beginning of this week and opened yesterday at 9.27/30 was seen spiking to a high of 9.50% on the back of considerable volumes changing hands.
In line with this, yields on the liquid two 2018 maturities (i.e. 1 April 2018 and 15 August 2018) were seen increasing as well to five week highs of 9.12% and 9.15% respectively followed by the seven-year maturity of 1 May 2021 to 10.15%.
However, buying interest at these levels saw yields dip once again to close the day at levels of 9.03/06 and 9.06/10 respectively on the liquid two 2018 maturities, 9.45/49 on the 1 July 2019 maturity and 10.05/15 on the 1 May 2021 maturity.
This was ahead of today’s weekly Treasury bill auction, at where an total amount of Rs. 10 billion will be on offer for a second consecutive week consisting of Rs. 0.5 b on the 91 day maturity, Rs. 1 b on the 182 day maturity and Rs. 8.5 b on the market favourite 364 day maturity.
At last week’s auction, the total accepted amount exceeded the total offered amount for a seventh consecutive week as weighted averages dipped by two basis points, three bp and one bp respectively to 6.69%, 6.85% and 7.06%.
In secondary bill markets, May 2014 bills were quoted at levels of 6.60% to 6.62%, July 2014 within 6.70% to 6.80%, November 2014 within 6.90% to 6.95% and the 364 day bill within 7.02% to 7.06%.
Meanwhile in money markets, the surplus liquidity in money markets on an overnight basis stood at Rs. 17.13 billion yesterday, as the Open Market Operations (OMO) department of the Central Bank mopped up an amount of Rs. 7.47 b from the system on an overnight basis by way of a Repo auction at a weighted average (WAvg) of 6.55% while a further amount of Rs. 9.66 b was deposited at CBSL’s Standing Deposit Facility Rate (SDFR) of 6.50%.
The OMO department was seen carrying out two further term repo auctions as well yesterday for Rs. 5 b each for durations of 16 days and 23 days in order to mop up liquidity on a more permanent basis. However, only an amount of Rs. 0.53 b was drained out at a WAvg rate of 6.75% on the 16 day duration value dated today as the 23 day auction did not receive any bids.
Rupee gains ground marginally
In Forex markets, the USD/LKR rate gained marginally yesterday to close the day at levels of Rs. 130.59/62 against its previous day’s closing of Rs. 130.60/65 on the back of export conversions. The total USD/LKR traded volume for the previous day (17 March 2014) stood at US$ 59.71 million. Some of the forward dollar rates that prevailed in the market were: one month – 131.18; three months – 132.18; and six months – 133.68.
