Unsettled market to face Treasury bond auctions

By Wealth Trust Securities

The activity in secondary bond markets was at a standstill yesterday as the market failed to gather any momentum from the shock outcome of Monday’s weekly Treasury bill auction. 

Selling interest by both foreign and local market participants saw offers increase across the yield curve as bids withdrew, widening two way quotes. The same trend was witnessed in the secondary bill market as well with the 91 day and 364 day maturities being offered at 9.10% and 10.50% respectively, well above its Monday’s weighted averages of 8.30% and 9.90%.

This was ahead of today’s Treasury bond auctions where a total amount of Rs.20 billion will be on offer consisting of Rs. 5 billion each on a 04.01 year maturity of 1 May 2020, a 5.06 year maturity of 15 October 2021, a 6.06 year maturity of 1 October 2022 and an 8.11 year maturity of 15 March 2025. 

The previous Treasury bond auctions held on 18 March recorded weighted averages of 11.87% and 12.26% respectively on the 4.01 year maturity of 1 May 2020 and the 7.09 year maturity of 1 January 2024 while all bids on the 1.03 year maturity of 15 June 2017 were rejected.

In money markets, call money and Repo rates remained broadly steady to average 7.93% and 7.94% respectively as surplus liquidity stood at Rs.12.85 billion.

Rupee depreciation continues   

 The value on the rupee dipped further as one week forward contracts on the active USD/LKR rate was seen depreciating further to close the day at Rs.146.40/50 against its Monday’s closing level of Rs.145.85/95 on the back of importer demand and portfolio outflows. The total USD/LKR traded volume for 21 March was $ 39.00 million. 

Some of the forward USD/LKR rates that prevailed in the market were one month – 147.15/30; three months – 148.80/00; and six months – 151.20/30.