Weekly Yield Movement & Volume
During the week, the secondary market yield curve shifted slightly downwards on the back of buying interest on selected maturities, while the overall market witnessed moderate volumes.
Slight buying interest was seen on short-tenure 2021 maturities with the CBSL announcement to purchase Rs 12.0 billion of bonds maturing in 2021 ([01.05.21], [01.08.21] and [15.12.21]) in Open Market Operations (OMO). Maturities [01.05.21], [01.08.21] and [15.12.21] were accepted at 8.60 per cent, 8.66 per cent and 8.76 per cent, respectively, at the Open Market Operations bond buyback held on [25.09.19].
At the weekly primary bill auction, the benchmark one-year was steady at 8.41 per cent. Meanwhile, the six-month was accepted at the same level of 7.75 per cent after a lapse of one week. In addition, the three-month was accepted at 7.62 per cent, up by 1bps. In the forex market, the rupee continues to depreciate to close the week at Rs 181.53 from Rs 180.95 held at beginning of the week.
Liquidity & CBSL Holdings
Market liquidity remained positive during the week. The highest excess liquidity was recorded on 18 September of Rs 59.9 billion; thereafter, liquidity narrowed down to close the week for Rs 22.4 billion. Meanwhile, CBSL holdings remained relatively stable to close the week at Rs 80.6 billion.
Foreign holding in Government Securities decreased by Rs 0.5 billion to record at Rs 109.7 billion, while foreign holding percentage was maintained at 2.0 per cent.
Maturities for next week
The Government Security market is required to settle a Treasury bill maturity amounting to Rs 4.0 billion and Treasury bond interest of Rs 9.2 billion during the week ending 04 October 2019.
Thursday (19.09.19): During the day, the secondary market witnessed slight buying interest, with moderate volumes amidst the positivity created with the improvement in the liquidity in the market and with the announcement of the Presidential Election date.
Mid-tenor maturities, [15.06.24] and [15.09.24] saw its yields trading in the range of 10.31-10.20 per cent, while [15.09.34] traded in the range of 10.93-10.81 per cent levels.
Friday (20.09.19): The secondary market yield curve remained broadly unchanged, while the overall market witnessed thin volumes.
The CBSL announced the purchase of bonds maturing in 2021 ([01.05.21], [01.08.21] and [15.12.21]) under Open Market Operations (OMO) on 25 September 2019, totalling Rs 12.0 billion.
With this announcement, a slight buying interest was seen on short tenure maturities, [01.08.21] and [15.12.21] trading at 8.85 per cent and 8.95-8.93 per cent levels, respectively.
On the belly-end of the curve, [15.07.23] traded at 9.85 per cent and [15.12.23] traded at 9.95 per cent, in addition, mixed activity was seen on [15.09.24] at 10.27-10.30 per cent levels and long-tenure maturity [15.09.34] changed hands at 10.85-10.87 per cent, respectively.
Monday (23.09.19): With the commencement of the week, the secondary market yield curve remained broadly unchanged with overall market witnessing very limited activities with ultra-thin volumes.
Short tenor [15.10.21] maturity was traded at 8.80 per cent, while with mixed activities, mid-tenor [15.09.24] saw its yield ranging between 10.26 per cent-10.28 per cent. Moreover, in the midst of slight selling interest, yield of long tenor 15.09.34 traded in the range of 10.88 per cent-10.92 per cent.
Tuesday (24.09.19): The secondary market yield curve remained steady at yesterday’s levels, while the overall market witnessed thin volumes. On the short end of the yield curve, buying interest was seen on maturities [01.08.21] and [15.10.21] trading at 8.70-8.80 per cent levels ahead of the weekly T-bill auction and outright purchase on 2021 maturities by CBSL.
Wednesday (25.09.19): The secondary market yield curve remained broadly unchanged, with the overall market witnessing moderate volumes. With the buying interest, short-tenor [01.08.21], [15.10.21] and [15.12.21] reached intra-day’s lows of 8.70 per cent, 8.75 per cent and 8.78 per cent, respectively, while in the midst of mixed activities, the yield of mid tenor [15.09.24] traded between 10.30-10.25 per cent.
Moreover, long-tenor [15.09.34] changed hands in the range of 10.87-10.85 per cent. Meanwhile, at the Open Market Operations bond buyback held on 25 September 2019, [01.05.21], [01.08.21] and [15.12.21] were accepted at 8.60 per cent, 8.66 per cent and 8.76 per cent, respectively.
Furthermore, at the primary bill auction, the yield of the three-month increased only by 1bps to 7.62 per cent, while yields of the six-month and one-year bill remained at the same levels of 7.75 per cent and 8.41 per cent, respectively.