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Treasury Bills and Bonds in Sri Lanka

Yields continue to plunge due to positive sentiment

CEYLON TODAY | 05.04.2019

Investment bank in Sri Lanka

By First Capital Research

Weekly Yield movement and Volume

On the back of continuous foreign interest in Government Securities, coupled with positive liquidity, the secondary market witnessed a downtrend across the yield curve amidst renewed buying interest from market participants. Positive sentiment was further fuelled on the back of the Treasury bill auction outcome. At the primary bill auction, the one-year T-bill was accepted at a weighted average of 10.15 per cent (i.e.  pre-26 October levels),  while post-bill auction,  the  one year further  dipped  to  9.95-10.05 per cent levels. In the forex market, the LKR was seen continuously appreciating, with the USD/LKR rate closing at Rs 174.6 against previous week closing levels of Rs 176.2, up by 0.9 per cent WoW. Furthermore, market liquidity turned positive to record at Rs 16.6 billion after nearly six months.

Liquidity and CBSL Holdings

CBSL   market   liquidity   turned   positive   on 3 March 2019 after a lapse of nearly six months. Prior to liquidity turning positive, the liquidity deficit was widening from 26 March 2019 to 2 April 2019. Meanwhile, CBSL holdings remained broadly steady at Rs 177.6 billion.

Foreign Interest

Foreign holding increased by Rs 1.6 billion to record at Rs 167.9 billion. However, foreign holding percentage remained stable at 3.1 per cent.

Maturities for next Week

The Government Securities Market has a Treasury bill maturity, amounting to Rs 25  billion that needs to be settled on the week ending 12 April 2019.