“T-Bill auction yields falls for the third week”

Weekly Yield Movement & Volume The secondary market yield curve edged down slightly, predominantly on the belly end of the curve with the emergence of modest buying interest on the back of speculation on interest rates easing. Meanwhile, the overall market displayed limited activities and low volumes while TBill auction yields fell across all maturities for the 3 rd straight week.

As CBSL decided to maintain the policy rates, market participants opted to be on the sidelines. However, following the primary auction announcement and CBSL’s decision to ease liquidity shortage in the banks, buying interest emerged on the mid to long tenors mainly on 01.05.24 and 01.07.2025 maturities. At the LKR 50.0Bn T-Bond auction, 01.05.24 maturity worth LKR 25.0Bn offered witnessed near complete acceptance at a weight average yield of 32.71% whilst 15.05.26 maturity was fully accepted at a weighted average yield of 31.69%.

Meanwhile, at the T-Bill auction, yields across all maturities plunged down moderately as per the expectations of market participants while the auction was fully accepted with 83% of the total offered being accepted from the 03M maturity which gathered higher reception with higher bids. Accordingly, weighted average yield of 03M maturity declined to 32.91% (-1bps) while 06M and 1Yr maturity edged down to 32.27% (-18bps) and 29.46%(-6bps), respectively. In the Forex market, LKR slightly appreciated against the greenback with the rupee recording at LKR 363.2 towards the end of the week compared to LKR 363.5 at the beginning of the week.

Foreign Interest Foreign holding in government securities remained unchanged at LKR 24.9Bn whilst foreign holding percentage was maintained at 0.02%. Maturities for next week The Government Securities market has to settle a Treasury bill maturity amounting to LKR 95.0Bn for the week ending 09th Dec-22.

Courtesy: First Capital Research