The yields in the secondary bond market fluctuated during the week ending March 4 as it decreased during the early part of the week leading to the weekly Treasury bill auction and monetary policy announcement while increasing towards the latter part of the week following the monetary policy announcement. The liquid maturities of 2022s (i.e. 01.10.22, 15.12.22), 2023’s (i.e. 15.01.23, 15.11.23, 15.12.23) and 15.09.24 saw their yields decrease to weekly lows of 5.68%, 5.70%, 5.76%, 6.20%, 6.26% and 6.62% respectively against its opening highs of 5.76%, 5.86% each, 6.38%, 6.35% and 6.78%. The successful full subscription of the weekly Treasury bill auction along with speculation on the outcome of the monitory policy announcement was seen as the main reasons behind the decrease in yields.
However, renewed selling interest following the monetary policy announcement where the Central Bank of Sri Lanka kept its policy rates steady saw yields increase marginally once again toward the later part of the week mainly on the maturities of 01.10.22, 15.12.22, 15.01.23, 15.11.23 and 15.09.24 to highs of 5.73%, 5.75%, 5.78%, 6.26% and 6.66%.
Further activity was witnessed on other 2023’s (i.e. 15.03.23, 15.05.23, 15.07.23 and 01.09.23) and 01.12.24 at levels of 6.00% to 6.25% and 6.70% to 6.79% while 2026’s (i.e. 15.01.26 and 01.02.26) and 15.08.27 maturities were seen trading at level of 7.05% and 7.45% to 7.495% as well in limited trade. This intern led to the overall yield curve steepening during the week as the short end of the yield curve reflected a marginal downward shift on a week-on-week basis.
In money markets, the total outstanding market liquidity increased marginally to Rs.172.82 billion in comparison to its previous week of Rs.171.55 billion while the CBSL’s holding of Gov. Security’s decreased to Rs.801.8 billion against its previous week of Rs.809.96 billion. The weighted average rates on overnight call money and repo remained mostly unchanged to average 4.54% and 4.57% for the week.
(References: Central Bank of Sri Lanka, Bloomberg E-Bond trading platform, Money broking companies)
Courtesy: Wealth Trust Securities Ltd