The secondary bond market closed the week ending January 22, 2021 on a bearish sentiment despite commencing and gliding through the week on a positive sentiment driven by the outcome of the weekly Treasury bill auction.
At the weekly bills auction, the weighted average rate on the benchmark 364 day bill dipped by 03 basis points to 4.99%, breaching the psychological 5.00% level for the first time in nine weeks while the total offered amount of Rs. 40 billion was successfully subscribed for a third consecutive week.
In the secondary bond market, yields on the liquid maturities of 2022’s (i.e. 15.11.22 & 15.12.22), 01.10.23 and 2024’s (i.e. 15.09.24 and 01.12.24) were seen dipping to weekly lows of 5.35%, 5.36%, 5.68%, 6.20% and 6.22% following the weekly bill auction outcome from its highs of 5.42%, 5.44%, 5.74%, 6.28% and 6.35% respectively. However, selling interest at these levels on the back of a dip in money market liquidity coupled with the announcement of T- bonds auctions for January 27 resulted in yields increasing again from its weekly lows towards the latter part of the week with activity slowing down considerably.
Maturities of 01.10.22, 2023’s (i.e. 15.01.23, 15.07.23, 15.12.23), 15.06.24, 01.05.25 and 2026’s (i.e. 15.01.26 & 01.02.26) traded at levels of 5.35% to 5.45%, 5.40%, 5.65% to 5.67%, 5.60% to 5.78%, 6.20%, 6.44%, 6.60% and 6.65%, while April, June, August 2021 bill maturities and the January 14, 2022 bill were seen changing hands at 4.58% to 4.71%, 4.72%, 4.75% and 4.91% in the secondary market.
The daily secondary market Treasury Bond/Bill transacted volumes for the first four trading days of the week averaged Rs.16.69 billion.
In the money market, the total outstanding market liquidity was seen decreasing sharply over the week to close the week at Rs.121.40 billion in comparison to its previous week's closing of Rs. 222.45 billion. The weighted average rates on overnight call money and repo was steady to average 4.54% and 4.55% respectively for the week while CBSL’s holding of Government Security’s decreased marginally to Rs. 724.25.
(References: Central Bank of Sri Lanka, Bloomberg e-Bond trading platform, Money broking companies)
Courtesy: Wealth Trust Securities Ltd