Bond market sentiment remains negative ahead of weekly T-Bill auction

The negative sentiment in the secondary bond market persisted at the start of a fresh trading week yesterday as most market participants were seen adopting a wait and see policy ahead of the weekly Treasury bill auction due today.

The weekly Treasury bill auction will be conducted a day prior due to Thursday being a public holiday. A total volume of Rs. 85 billion will be on offer, a reduction of Rs. 2.5 billion over its previous week’s total offered volume. This will consist of Rs. 35 billion on the 91 day maturity and Rs. 25 billion each on the 182 day and 364 day maturities. At last week’s auction, weighted average rates decreased for a third consecutive week by 114, 27 and 34 basis points on the 91 day, 182 day and 364 day maturities to 27.72%, 28.97% and 29.19% respectively. The total offered amount of Rs. 87.5 billion was successfully accepted at its 1st phase of the auction while a further amount of Rs. 20.35 billion was raised at its 2nd phase of the auction.

The secondary bond market was at a complete standstill yesterday.

The total secondary market Treasury bond/bill transacted volume for 5 August was Rs. 7.41 billion.

In money markets, the weighted average rates on overnight Call money and REPO stood at 15.50% each while the net liquidity deficit stood at Rs. 471.20 billion yesterday. An amount of Rs. 290.34 billion was deposited at Central Banks SDFR ( Standard Deposit Facility Rate) of 14.50% while an amount of Rs. 761.54 billion was withdrawn from Central Banks SLFR ( Standard Deposit Facility Rate) of 15.50%.

Furthermore, the Domestic Operations Department (DOD) of the Central Bank of Sri Lanka conducted auctions for outright sales of Treasury bills totalling Rs. 10 billion for periods of 45 days and 52 days yesterday. The total amount was accepted at a weighted average rate of 23.00% each.

Forex market

In the Forex market, the middle rate for USD/ LKR spot contracts remained stable at Rs. 360.80 yesterday.

The total USD/ LKR traded volume for 5 August was $ 2.28 million.

(References: Central Bank of Sri Lanka, Bloomberg E-Bond trading platform, Money broking companies)