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Daily report for the 08th August 2024 – Courtesy Wealth Trust Securities Ltd
- Secondary Bond Market Yield Curve Flattens; Rates Edge Up Further
- Rs. 60 Bn Treasury Bond Auction Details Announced
- Rupee continues to appreciate
The secondary bond market yesterday continued on a bearish trajectory, with yields overall increasing further. In particular, the shorter tenor bonds (2026-2027 durations) adjusted, experiencing a steep increase. Meanwhile the medium tenor 2028 durations were seen holding stable. However, the longer tenor bonds (durations 2029 and beyond) saw activity at a standstill, as two-way quotes widened. In conclusion, the yield curve was seen flattening at the elevated levels.
Accordingly, the yield on the 01.08.26, 15.01.27, 01.05.27 and 15.12.27 maturities were seen increasing to the considerably elevated levels of 10.75% to 10.80%, 11.00% to 11.12%, 11.80% and 12.10% to 12.30% respectively. However, yields on the 2028 tenors were seen holding broadly steady as the 01.07.28 maturity was trading the within the range of 12.45% to 12.50%. Overall activity was muted and transaction volumes were relatively low.
In secondary bills market, the March (close to 6 months) and July (close to 1 year) 2025 maturities were seen transacting at the rate of 9.80% to 9.89% and 10.10% respectively. These levels are above the weighted average rates recorded at this week’s Treasury Bill auction.
The details of the upcoming Rs. 60.00 billion Treasury Bond auction scheduled for the 13th of August (next week) were announced. The auction will comprise of Rs 45.00 billion from a new 15th of June 2029 maturing bond bearing a coupon of 11.75% and Rs 15.00 billion from the 01st October 2032 maturity bearing a coupon of 9.00%.
The total secondary market Treasury bond/bill transacted volume for 07th August was Rs. 110.90 billion.
In money markets, the weighted average rate on overnight call money was at 8.56% and repo was at 8.80%.
The net liquidity surplus stood at Rs. 80.20 billion yesterday as an amount of Rs. 101.30 billion was deposited at Central Banks SDFR (Standard Deposit Facility Rate) of 8.25% vs an amount of Rs 1.10 billion been withdrawn from the Central Banks SLFR (Standing Lending Facility Rate) of 9.25%.
Further, the DOD (Domestic Operations Department) of Central Bank injected liquidity by way of an overnight reverse repo auction for Rs. 20.00 billion at a weighted average rate of 8.55%.
Forex Market
In the Forex market, the USD/LKR rate on spot contracts appreciated further to close the day at Rs. 300.80/301.05 against its previous day’s closing level of Rs.301.55/301.65.
The total USD/LKR traded volume for 06th August was US $ 62.20 million.
(References: Central Bank of Sri Lanka, Bloomberg E-Bond trading platform, Money broking companies)