Secondary market bond yields steady ahead of weekly Treasury bill auction

By Wealth Trust Securities
Secondary market bond yields remained steady in thin trade once again ahead of this week’s Treasury bill auction. A limited amount of activity was witnessed on the liquid two 2018 maturities (i.e. 01.04.2018 and 15.08.2018) and the 01.07.2019 maturity within the range of 8.72% to 8.74%, 8.82% to 8.84% and 9.05% to 9.07% respectively. However, yields on the shorter end of the yield curve were seen dipping with the 1 November 2015 maturity changing hands within the range of 7.35% to 7.38% yesterday.
This week’s Treasury bill auction will have on offer a total amount Rs. 7.5 billion with Rs. 0.5 billion on the 91-day, Rs. 2 billion on the 182-day and Rs. 5 billion of the 364-day maturities respectively. At the previous auction, weighted averages recorded dips of 1 basis point each to 6.79% and 7.03% respectively on the 182-day and 364-day maturities while the weighted average on the 91-day dipped by 2 basis points to 6.61%. In secondary bill markets, July 2014 bills were quoted within the range of 6.75% to 6.80%, December 2014 bills within the range of 6.90% to 7.00% and January bills within the range of 6.95% to 7.00% while the 364-day bill was quoted at 7.00/05.
The Open Market Operations (OMO) department of the Central Bank was seen mopping up an amount of Rs. 8.9 billion on a three day basis at a weighted average (WAvg) of 6.59% by way of a repo auction as surplus liquidity stood at Rs. 22.06 billion yesterday. Overnight call money and repo rates remained steady to average 6.95% and 6.51% respectively
Rupee remains stable
In Forex markets, the USD/LKR rate remained steady to close the day at Rs. 130.62/130.65 for an eighth consecutive day as markets were at equilibrium. The total USD/LKR traded volume for the previous day (21 April) stood at $ 32.95 million.
Some of the forward dollar rates that prevailed in the market were 1-Month: Rs. 131.21, 3-Months: Rs. 132.24 and 6-Months: Rs. 133.89.

Rupee ends slightly weaker on importer dollar demand REUTERS: The rupee edged down on Tuesday due to late importer dollar demand after the central bank kept its key policy rates unchanged at multi-year lows in line with market expectations. Dealers said they expect the currency to remain steady in the near future until credit demand rebounds. The spot rupee ended at Rs. 130.62/67 per dollar, weaker from Monday’s close of Rs. 130.60/62. Before the market opened, the central bank kept policy rates steady at multi-year lows, as expected, and expressed confidence that private sector credit growth would rebound in the second quarter and push up the pace of economic expansion. “The rupee will remain at these levels until we see growth in private sector borrowing. We haven’t seen that happening yet,” said a currency dealer. Private sector credit grew 4.4% year-on-year in February, the slowest since May 2010, latest data from the central bank showed. That compared with a growth of 5.2% in January this year and 13.3% in February 2013. Dealers said the market is awaiting some direction from the weekly treasury bill auction due Wednesday, to see if the central bank would allow yields on T-bills to ease further. They expect the rupee to trade in a range of Rs. 130.60-70 in the near future. It has been hovering between Rs. 130.55 and Rs. 130.70 per dollar since 3 March, Thomson Reuters data showed. There has been a gradual increase since mid-March in remittances by Sri Lankan expatriates to their relatives, while dollar selling has also increased as exporters paid bonuses to their employees. Those inflows have helped ease depreciation pressure, which was seen in the early part of the year.