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1-Yr T-Bill rises for first time in 6 months

Ceylon Today | 18 – 08- 2019

By First Capital Research

Weekly Yield Movement & Volume

At the weekly primary bill auction, the three-month bill was accepted at a weighted average of 7.80 per cent, while the six-month was rejected after five months. Furthermore, reversing the previous trend, the benchmark one-year bill increased for the first time in six months by 6bps to be accepted at a weighted average of 8.17 per cent. Post bill auction, selling interest was witnessed primarily centred on the short end of the yield curve, while the market favourite one-year T-bill was seen trading higher at 8.20 per cent.

Though there was no major reaction following the bond auction, mixed activity was seen on [15.06.24] at 9.75-9.70 per cent levels, [01.08.26] at 9.90 per cent and [15.01.27] at 9.95 per cent.

During the week, short-term maturities fell by 10-12bps and mid-tenors came down by a mere 2-4bps, while on the long end of the curve, yields dipped by 3-8bps amidst the overall market witnessing limited activities with thin volumes.

Liquidity & CBSL Holdings

Market liquidity continues to remain positive and closed at Rs 27.49 billion. CBSL holdings marginally improved to Rs 106.1 billion relative to Rs 105.7 billion held at the beginning of the week.

Foreign Interest

Foreign holding in Government Securities decreased by Rs 729 million to record at Rs 136.5 billion. Foreign holding percentage was maintained at 2.5 per cent.

Maturities for next Week

The Government security market needs to settle a Treasury bill maturity amounting to Rs 18.0 billion during the week ending 23 August 2019.

Daily Summary

Thursday (08.08.19): The secondary market remained broadly unchanged, with the overall market witnessing limited activities with thin volumes ahead of the bond auction on 09 August 2019, which offered Rs 15.0 billion with maturities of eight years and nine months, and 20 years, respectively. With the slight buying interest, short-tenor [01.05.21] traded at 8.50 per cent, while [15.10.21] traded in the range of 8.70-8.65 per cent. [15.12.21] traded at 8.70-8.69 per cent, while [01.10.22] traded at 8.95 per cent. Mid-tenor [15.06.24] saw its yields trading between 9.77-9.75 per cent. Moreover, [01.08.26] traded at 9.95 per cent, while long-tenor [15.01.27] traded at 10.00 per cent.

Friday (09.08.19): The secondary market yield curve shifted slightly downwards, while overall market witnessed moderate volumes. On the shorter end of the curve, buying interest was seen on [01.08.21], [15.10.21] and [15.12.21] trading at 8.53 per cent, 8.55 per cent and 8.60 per cent, respectively, while [01.10.22] traded at 8.85-8.80 per cent levels and [15.07.23] at 9.43-9.40 per cent levels. Mixed activity was seen on [15.06.24] at 9.75-9.70 per cent levels, [01.08.26] at 9.90 per cent and [15.01.27] at 9.95 per cent. At the primary bond auction, [01.05.28] and [15.08.39] were accepted at weighted averages of 10.00 per cent and 10.29 per cent, respectively.

Tuesday (13.08.19): At the primary bill auction held on 13 August, the three-month bill was accepted at a weighted average of 7.80 per cent, while the six-month was rejected after five months. Furthermore, reversing the previous trend, the benchmark one-year bill increased for the first time in six months by 6bps to be accepted at a weighted average of 8.17 per cent.

In line with the bill auction outcome, the secondary market witnessed selling interest, while overall market witnessed low volumes with limited activities. Selling interest was seen on the shorter end of the curve with [01.08.21], [15.10.21] and [15.12.21] trading at 8.55-8.65 per cent levels, [15.07.23] at 9.50 per cent, and [15.06.24] at 9.78-9.80 per cent levels, while foreign selling was also seen on [15.12.23] at 9.57 per cent levels. Post bill auction, the one-year T-bill was seen trading higher at 8.20 per cent.