Government Securities Market (Week ended July 9, 2021)
The activity witnessed in the secondary bond during the week ending July 9, 2021 predominantly centered on the very short end of the yield curve, with focus on the 2023 maturities, which led to a further steepening on the short end of the yield curve.
Prior to the announcement of the cut offs on the Treasury bond auctions due on Tuesday, buying interest during most part of the week, mainly around the 2023 maturities (i.e. 15.03.23, 15.07.23, 01.09.23 and 15.11.23) saw its yields dip to weekly lows of 5.83%, 6.00%, 6.05% and 6.18% against its previous week’s lows of 5.90%, 6.03%, 6.11% and 6.24%. In addition, maturities of 15.11.22 and 15.01.23 dipped to lows of 5.56% and 5.63% respectively while maturities of 15.03.24 and 01.12.24 changed hands at levels of 6.40% and 6.70% respectively as well. However, yields were seen increasing once again on Friday from its weekly lows.
The weekly Treasury bill auction continued its positive outcomes, as the total accepted amount increased to 93.63% of its total offered amount while the monetary board of the Central Bank of Sri Lanka, at its announcement made on 08th of July 2021 kept its policy rates of Standing Deposit Facility Rate (SDFR) and Standing Lending Facility Rate (SLFR) steady at 4.50% and 5.50% respectively for an eight consecutive announcement.
In money markets, the total outstanding liquidity surplus increased marginally for the first time to four weeks to Rs.85.17 billion while the CBSL’s holding of Gov. Security’s decreased slightly to Rs.917.05 billion. The weighted average rates on overnight call money and repo averaged 4.94% and 4.96% respectively for the week.
(References: Central Bank of Sri Lanka, Bloomberg E-Bond trading platform, Money broking companies)
Courtesy: Wealth Trust Securities Ltd