The secondary market bond yields increased during the week ending December 24, 2021 to record an upward shift of the yield curve for a second consecutive week. Aggressive selling interest was fueled by the outcome of the weekly Treasury bill auction and the announcement of the National Consumer Price Index (NCPI; Base 2013=100) for the month of November.
At the weekly Treasury bill auction, the weighted average yield of the market favorite 91-day maturity increased by 47 basis points to 7.71% while the auction went undersubscribed for a second consecutive week. Meanwhile, the NCPI for the month of November increased sharply to 11.1% on its point to point against its previous month of 8.30%.
The secondary bond market yields on the liquid maturities of 01.05.25, 15.10.27, 01.01.29 and 15.03.31 were seen hitting weekly highs of 10.77%, 11.60%, 12.02% and 12.00% respectively against its previous weeks closing levels of 9.80/10, 11.32/38, 11.40/80 and 11.70/80. In secondary bills, January and February 2022 maturities were seen hitting highs of 7.60% and 7.70% from its week’s lows of 7.18% and 7.50%.
In money markets, the weighted average rates on call money and repo remained mostly unchanged at 5.93% and 5.99% respectively for the week as a staggering volume exceeding Rs.438 billion was withdrawn on a daily basis during the week from Central Banks SLFR (Standard Lending Facility Rate) of 6.00%. A historically high volume of Rs.534.64 billion was accessed from Central Banks SLFR on December 23.
The Domestic Operations Department (DOD) of Central Bank was seen injecting liquidity by way of a 60-day reverse repo auction at a weighted average rate of 7.20% during the latter part of the week while it drained out liquidity during the early part of the week by way of overnight to three- day repo auctions at a weighted average rate of 5.99%.
The CBSL’s holding of Gov. Securities was registered at Rs. 1,362.76 billion against its previous weeks of Rs. 1,372.55 billion.
(References: Central Bank of Sri Lanka, Bloomberg E-Bond trading platform, Money broking companies)
Courtesy: Wealth Trust Securities Ltd