Rs. 5.5 b worth bids on 91-day T-bill rejected for first time in 51 weeks

All bids for the benchmark 91-day Treasury bill were rejected at its weekly auction held yesterday.

Investors seeking a higher yield on the 91-day bill were seen as the reason for all bids to be rejected, according to market sources. The bids amounted to Rs. 5.5 billion or 22% of the total. The Weighted Average Yield WAY) of 91-day bill at last auction was 10.66%

However, the Central Bank’s total requirement was met by accepting more on the 364-day bill (Rs. 9.45 billion accepted out of Rs. 15.39 billion bids received) as it represented 89% of the total accepted volume. The WAY of 364-day bill rose by 11 basis points to 12.48% whilst that of 182-day bills rose by seven basis points to 11.90 with Rs. 1.14 billion accepted from Rs. 4.2 billion worth of bids.

This week’s auction reflected an increase in the Central Bank’s borrowing cost for a second consecutive week.

Wealth Trust Securities said subsequent to the release of the auction results, the decreasing trend in secondary market bond yields witnessed during the morning hours of trade reversed, as yields increased once again against its intraday day lows of 12.60%, 12.78% and 13.15% on the more liquid three-year, five-year and six-year maturities to levels of 12.75%, 12.90% and 13.25% respectively.

Overnight call money and repo rates remained mostly unchanged to average 10.52% and 9.66% respectively as money market liquidity increased marginally to a net surplus of Rs. 1.86 billion. The Central Bank refrained from conducting any overnight OMO auctions for a second consecutive day as well, Wealth Trust said.

In forex markets, the rupee depreciated for a second consecutive day by around 10 cents yesterday to a low of Rs. 130.10 and remained steady to close the day at levels of Rs. 130.05 to Rs. 130.15. The total USD/LKR traded volume for the previous day (23 October 2012) stood at US$ 43.44 million. Given are some forward dollar rates that prevailed in the market: one month – 130.59; three months – 132.94; and six months – 136.01.