Weekly averages plunge to over 26-week lows

Secondary bond market yields remain

By Wealth Trust

The weekly weighted averages continued to tumble for a third consecutive week, recording a steep decrease this time around at its auctions conducted yesterday. 

The highest bid to offer ration of 6.37:1 in over 10 months saw the 182-day decline by 22 basis points to a 26-week low of 10.01% followed by the 364-day bill by 21 basis points to a 28-week low of 10.18%. The weighted average on the 91-day bill decreased by four basis points to 9.56%. The exact offered amount of Rs.24.50 billion was accepted at the auction with the 182 day bill representing 51% of this volume, indicating continued market appetite for this maturity.

The expectation and final outcome at the weekly Treasury bill auction saw the secondary bond market continuing its bullish trend yesterday. 

Activity remained high as yields on the liquid maturities of 15.12.21, 15.05.23, 01.08.24, 01.08.26 and 15.06.27 were seen dipping to lows of 10.70%, 10.84%, 10.82%, 10.95% and 11.00% respectively against their previous day’s closing levels of 10.83/86, 10.97/00, 10.98/02, 11.06/09 and 11.08/12. 

In addition, the 15.05.30 maturity dipped to an intraday low of 11.22% against its previous day’s closing levels of 11.25/35 while on the very short end of the curve early 2019 maturities were seen changing hands at 10.20%. .

The total secondary market Treasury bond transacted volume for 18 July 2017 was Rs. 11.45 billion.

Meanwhile in money markets, the weighted average on the overnight call money and repo rates decreased marginally to average 8.73% and 8.78% respectively as net surplus liquidity in the system increased further to Rs. 31.75 billion yesterday. The Open Market Operations (OMO) Department of the Central Bank of Sri Lanka drained out an amount of Rs. 27.77 billion on an overnight basis at a weighted average of 7.32% by way of a repo auction.

 Rupee remains mostly unchanged

Meanwhile, in the Forex market, the USD/LKR rate on spot contracts remained mostly unchanged yesterday to close at Rs. 153.60/70.

The total USD/LKR traded volume for 18 July 2017 was $ 82.29 million.

Some of the forward USD/LKR rates that prevailed in the market were one month - 154.65/85; three months - 156.60/80 and six months - 159.45/65.