Bond yields decline ahead of Treasury bond auctions

By Wealth Trust Securities

Continued buying interest mainly by local market participants on the back of moderate volumes saw secondary market bond yields decrease further yesterday. 

The yields on the liquid maturities of 15.09.19, the two 2021 maturities (i.e. 01.08.21 and 15.10.21), 01.09.23, 01.08.24 and 01.09.28 dipped to intraday lows of 11.65%, 12.17%, 12.19%, 12.35%, 12.45% and 12.70% respectively against its previous day’s closing levels of 11.75/85, 12.18/25, 12.20/30, 12.40/45, 12.48/53 and 12.70/90.

This was ahead of Tuesday’s (27) Treasury bond auctions, where Rs. 57 billion in total will be on offer consisting of Rs. 19 billion each on a 4.02 year maturity of 01.03.2021, 7.07 year maturity of 01.08.2024 and a 9.07 year maturity of 01.08.2026. At its last auction held on 29 August 2016, the weighted averages on these exact maturities stood at 10.61%, 10.96% and 11.06% respectively.

In money markets, the overnight call money and repo rates remained mostly unchanged to average 8.42% and 8.55% respectively as the net surplus liquidity was seen increasing to a five and a half month high of Rs. 21.2 billion yesterday. The Open Market Operations (OMO) Department of the Central Bank drained out an amount of Rs. 7.36 billion on an overnight basis at a weighted average of 7.47% by way of a repo auction.

Rupee continues its declining trend

The rupee rate on the active one week forward contract depreciated further to close the day at Rs. 150.85/95 against its previous day’s closing levels of Rs. 150.70/80 on the back of continued importer demand and foreign selling in rupee bonds.

The total USD/LKR traded volume for 21 November 2016 was $ 47.61 million.

Some of the forward USD/LKR rates that prevailed in the market were one month - 151.40/65; three months - 152.95/20 and six months - 155.10/40.