Treasury Bill yields dip for first time in six weeks

The weighted averages at this week’s Treasury Bill auction dipped marginally for the first time in six weeks, debt market specialist Wealth Trust told the Daily FT.

The dip reversed an upward trend in rates over the past few weeks, it added.

The 91 day and 364 day maturities dipped by one basis point each to 11.35% and 13.15% respectively while the 182 maturity dipped by 6 basis points to 12.85%.

“The decline took place amidst the Central Bank accepting Rs. 12 billion additional, over its initial offer amount of Rs. 18 billion,” Wealth Trust said.

“Heavy dollar inflows into the Treasury Bill and Bond markets over the last two weeks coupled with expectations of interest rates to decline in the medium-term was seen as the reasons behind the dip in weighted averages,” it added.

Furthermore, an overwhelming volume of Rs. 20 billion was accepted from the 182-day maturity, reflecting markets appetite for this duration.

However, this sentiment, according to Wealth Trust, was not reflected in the secondary bond market, with yields remaining mostly unchanged. Continued activity was witnessed on the two-year and five-year maturities.

In the secondary market, two-year Bonds’ yield was 13.73% to 13.76% and for five-year tenure was 14.34% and 14.38%.

Wealth Trust also noted that there were signs of liquidity returning to money markets.

Market liquidity reflected a marginal surplus of Rs. 99 million for the first time in four days as all bids were rejected on an intended reverse repo auction of Rs. 2 billion yesterday, in order to infuse liquidity into the system. A swap of dollars into rupees was seen as the reason for the increase in liquidity, according to market sources.

The rupee dropped marginally by around 15 cents yesterday to Rs. 131.05. Heavy State buying was seen as the reason behind the marginal dip according to dealers.