The sentiment in the secondary bond market turned positive during the week ending 12th November 2021 due the declining trend in weighted averages at the weekly Treasury Bill auction and the robust outcome at the Treasury bond auctions. This led to a shift downwards of the yield curve on a week on week basis and on the back of moderate activity in the secondary market.
At the weekly Bill auction, the weighted average rate of the market favorite 91 day bill decreased further by 20 basis points to 7.98% while the total offered amount at the auction was fully subscribed for a fourth consecutive week. The primary Treasury bond auctions too produced impressive results as its weighted averages were recorded well below or similar to its pre-auction market rates while both maturities were fully subscribed at its 01st phase of the auction for the first in seven auctions.
Renewed buying interest in the secondary bond market, mainly on the maturities 15.12.23, 01.12.24, 15.01.27, 01.09.28 and 15.05.30 saw its yields dip to intraweek lows of 9.00%, 9.40%, 10.90%, 11.53% and 11.68% respectively against its previous weeks closing levels of 9.10/25, 9.40/70, 11.05/15, 11.50/60 and 11.50/12.00. In addition, maturities of 15.11.23, 15.03.24, 15.01.26 and 15.03.31 traded at levels of 9.00%, 9.16% to 9.22%, 10.50% and 11.85% to 11.91% as well.
In secondary bills, January 21, January 28 and February 4, 2022 maturities traded at a low of 7.50%, 7.55% and 7.60% respectively. Nevertheless, selling interest towards the later part of the week saw two-way quotes increasing again to close the week marginally higher in comparison to its weekly lows.
In money markets, the total outstanding liquidity deficit was seen increasing further during the week to a substantial shortfall of Rs. 249.70 billion by the end of the week against its previous weeks of Rs.222.50 billion. The weighted average rates on overnight call money and repo was 5.93% and 5.95% for the week while CBSL’s holding of Gov. Securities decreased further to Rs. 1,447.73 billion.
(References: Central Bank of Sri Lanka, Bloomberg E-Bond trading platform, Money broking companies)
Courtesy: Wealth Trust Securities Ltd