Upward trend in secondary market bond yields reverses during the week

Monday, 18 November 2013 00:01 - - {{hitsCtrl.values.hits}}

By Wealth Trust Securities Following the outcome of the weekly Treasury bill auction where the weighted averages (WAvgs) declined for an eighth consecutive week to 8.89% and 9.79% respectively on the 182 day and 364 day maturities, the upward trend in secondary market bond yields witnessed during the early part of the week reversed.

The liquid maturities of 1 January 2017 and the two 2018s (i.e. 1 April 2018 and 15 August 2018) were seen opening the week at levels of 10.68/72, 10.97/99, and 11.06/08 and increasing to weekly highs of 10.90%, 11.20% and 11.30% respectively. However, buying interest towards the latter part of the week saw yields close the week lower once again at levels of 10.84/86, 11.10/12 and 11.20/22. In addition, a limited amount of activity was witnessed on the shorter durations of 15 July 2015 and 1 April 2016 within the range of 10.20% to 10.30% and 10.47% to 10.55% respectively. In secondary bill markets continued demand during the week saw May 2014 change hands within the range of 8.95% to 9.05% and durations centering the 364 day maturity within 9.75% to 9.80%. Meanwhile in money markets, the overnight call money and repo rates remained steady to average 7.76% and 7.02% respectively for the week as surplus liquidity increased towards the later of the week to close the week at Rs. 20.82 b from its weekly low of Rs. 4.1 billion.

The Open Market Operations (OMO) Department of Central Bank was seen mopping up liquidity during the week by way of seven day term repo auctions at weighted averages ranging from 7.46% to 7.48%. Rupee on spot contracts remain stable amidst importer demand Activity on spot contracts dried up during the week as it was seen closing the week steady at Rs. 131.10/15 as demand for contracts value cash, tom and spot next saw it change hands above the spot range within levels of Rs. 131.08/10, 131.10/13 and Rs. 131.18/22 respectively. The total USD/LKR traded volume for the first four days of this week stood at US$ 49.12 million. Some of the forward dollar rates that prevailed in the market were: one month – 131.95; three months – 133.58; and six months – 135.93.