Weekly Yield movement & Volume
During the first half of the week, the secondary market yield curve had a slight upward movement; however, during the latter session’s yields decreased on the back of buying interest which mainly centred on mid-tenure maturities. With continued foreign buying in rupee bonds, the rupee has been relatively stable, and some appreciation was witnessed for the last two consecutive days as the rupee closed on 30 January at Rs 179.25/50. At the primary bill auction held on 30 January, the one-year was accepted at a weighted average of 10.69 per cent losing only 1bps. Meanwhile the three-month was not offered, and the six-month, although offered, was rejected. Bond market participants remained in anticipation for the bond auction to be held on 31 January.
Liquidity & CBSL Holdings
CBSL market liquidity remained negative throughout the week recording the lowest liquidity for the week on 25 January amounting to Rs 137.7 billion. CBSL holdings increased towards the latter part of the week and closed at Rs 176.4 billion.
Foreign holding was recorded at Rs 150.2 billion, recording an increase of Rs 4.7 billion, continuing the foreign selling since August 2018. Foreign holding percentage for the week marginally improved to 2.9 per cent from 2.8 per cent in the previous week.
Maturities for next Week
The Government Securities Market has a Treasury Bill maturity amounting to Rs 18.7 billion, which needs to be settled on 8 February 2019.
Thursday (24.01.19): The secondary market saw the overall yield curve remaining broadly unchanged while market witnessed thin volumes with, limited activity was witnessed on [15.12.21] at 10.80 per cent and two mid-tenure 2023 maturities ([01.09.23] and [15.12.23]) at 11.25 per cent and [01.08.26] at 11.45 per cent.
Friday (25.01.19): The secondary market yield curve experienced a parallel upward shift as the market participants reacted to the announcement of bond auction calendar to raise Rs 50 billion, Rs 70 billion and Rs 40 billion in February, March and April respectively. The market witnessed thin volumes with following maturities reaching intraday highs: [01.03.21] at 10.80 per cent, [15.12.21] at 10.88 per cent, [15.07.23] at 11.35 per cent, [15.12.23] at 11.37 per cent, [15.05.25] at 11.53 per cent, [01.06.26] at 11.50 per cent, [01.08.26] at 11.60 per cent, [01.09.28] at 11.67 per cent. USD:LKR closed the week firmer at 181.55/75.
Monday (28.01.19): The secondary market yield curve experienced a slight upward shift while overall market witnessed thin volumes. CBSL’s bond auction calendar, which was published on 25 January, was amended on 28 January, announcing that CBSL will conduct an auction on 31 January instead of 12 February. The market reacted in distress to the change in the bond auction calendar, with selling interest mainly centered on [15.12.23] with yield reaching the 11.38 per cent to 11.50 per cent range; however, during the latter part of the day, foreign buying interest was seen at 11.48 per cent to 11.38 per cent levels, to close the day at 11.32/38 per cent.
Tuesday (29.01.19): The secondary market yield curve witnessed a parallel downward shift amidst the foreign buying interest mainly centered on the [15.12.23] maturity. In the midst of thin volumes, short-tenure maturity [15.12.21] was seen trading at intraday low of [10.95] per cent, while following maturities traded at their intraday lows: [15.07.23] at 11.27 per cent, [15.12.23] at 11.20 per cent, [15.03.25] at 11.34 per cent, [01.08.26] at 11.42 per cent and [01.09.28] at 11.55 per cent. Meanwhile, on 29 January, CBSL announced the issuance of Rs 50.0 billion worth of bonds at the bond auction to be held on 31 January 2019.
Wednesday (30.01.19): Ahead of the bond auction due on [31.01.19], the secondary market yield curve continued its downtrend amidst foreign buying interest mainly centred on the [15.12.23] and [01.08.26] maturities during the early session of the day while following maturities were seen trading at their intra day’s lows with; [01.03.21] at 10.70 per cent, [15.10.21] and [15.12.21] at 10.85 per cent, [15.03.25] at 11.25 per cent, [15.05.23] at 11.10 per cent, [15.07.23] at 11.12 per cent, [15.12.23] at 11.03 per cent, [15.03.25] at 11.28 per cent, [01.08.26] at 11.24 per cent, [15.06.27] at 11.30 per cent and [01.09.28] at 11.35 per cent.
However, post the bill auction held on 30 January, yields ended slightly higher as the dip in rates of the auction were not in line with the expectations of market participants, as yield of the one-year bill dipped by only 1bps to 10.69 per cent, while bills of three-month and six-month were not accepted.