Year’s first T bond auction attracts bids over Rs. 92 b; Rs. 43.1 b accepted

An amount of Rs.43.1 billion was accepted at the first Treasury bond auction conducted for 2013 and the first in five months, surpassing the initial offered amount of Rs. 40 billion. All three maturities attracted bids totalling up to Rs. 92.35 b.

The five year bond drew Rs. 34 billion in bids and Rs. 16.49 billion were accepted at a weighted average of 10.90% and the 15 year bond attracted Rs. 33.1 billion worth of bids of which Rs. 16.8 billion was accepted with a weighted average of 12.25%.

The eight year bond drew Rs. 25.1 billion worth of bids and Rs. 10 billion accepted with a weighted average of 11.64%.

Wealth Trust Securities said in secondary bond markets activity remained very high mainly centring on the five year duration. Yields on this maturity (15 August 2018) opened the day at a high of 10.90% and dipped to an intraday low of 10.30% subsequent to the release of the auction results. However profit taking at these levels saw its yields increase once again to close the day at 10.60%-10.70%.

Furthermore, the auction bond of 1 April 2018 saw trades been taking place at levels ranging from 10.50% to 10.85% and closed the day at 10.80%-10.90% reflecting a premium of 20 basis points above the 15 August 2018 maturity. Other durations along the yield curve such as the two year, three year and four year maturities was seen been quoted at levels of 10.60%-10.80%, 10.85%-11.00% and 10.70% to 10.80% respectively, which in turn reflected an distortion on the yield curve.