The upward momentum in secondary bond market yields witnessed over the past few weeks came to halt during the latter part of week ending October 15 following the outcome of the monetary policy announcement on October 14, at where the Central Bank of Sri Lanka was seen holding policy rates unchanged.
However, yields were seen increasing during the first half of the week driven by the continuous increase in primary market weighted average rates. At the T-bond auctions, the maturities of 15.12.23, 15.01.27 and 01.10.32 registered weighted average rates of 9.36%, 11.14% and 11.23% respectively against the weighted average rates of 8.12% and 10.23% recorded for the maturities of 15.11.23 and 15.05.30 respectively at the bond auctions conducted on 28thSeptember 2021. At the weekly bill auction, the weighted average rate on the 91 day bill increased by 89 basis points to 8.04% while all bids received on the 182 day and 364 day maturities were rejected.
The yield on the liquid maturity of 15.12.23 was seen decreasing to a low of 9.25% against its high of 10.00% on Thursday while the maturities of 01.12.24 and 15.01.27 decreased to 9.70% and 11.25% respectively as well. The same momentum was even witnessed in the secondary bill market, as the 91 day bill was traded at a low of 7.60%. However, selling interest at these levels curtailed any further downward movement while the overall yield curve still produced a parallel shift upwards week on week.
Furthermore, the weekly Treasury Bill auction for the week ending 22nd October will be conducted On Monday, due to the shortened trading week. A total volume of Rs.74.5 billion will be on offer, which will be Rs.10.5 billion less than its previous weeks total offered volume.This will be consist of Rs. 20 billion on the 91-day maturity, Rs. 22 billion on the 182-day maturity and Rs. 32.5 billion the 364-day maturity.
In money markets, the weighted average rates on overnight call money and repo remained mostly unchanged at 5.92% and 5.93% for the week against its previous weeks 5.91% and 5.93% while the total outstanding liquidity shortage at the end of the week stood at Rs.151.62 billion against its previous weeks of Rs.119.86 billion. The CBSL’s holding of Gov. Securities was registered at Rs.1,469.84 billion against its previous weeks of Rs.1,450.21 billion while the Domestic Operations Department (DOD) of Central Bank drained out liquidity during the week from a two-day to seven-day period by way of repo auctions at weighted average yields ranging from 5.98% to 6.05%.
(References: Central Bank of Sri Lanka, Bloomberg E-Bond trading platform, Money broking companies)
Courtesy: Wealth Trust Securities Ltd