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Weekly Government Securities Market – 04-01-2019

By First Capital Research
Weekly Yield movement & Volume

The secondary market yield curve was relatively stable; however during the latter part of the week, the yield curve was seen shifting slightly downwards across the board due to buying interest seen in the market.

Continued depreciation in currency was witnessed, recording the lowest on 28 December at Rs 183.00. However, it has currently settled at Rs 182.85.

At the primary bill auction held on 2 January, yields of the six-month and one-year bills were accepted at 9.95% and 10.99% respectively, slightly below previous levels. The one-year bill recorded a steep dip, falling below the psychological level of 11% for the first time in seven weeks (excluding the cancelled bill auction last week (26.12.18)).


Liquidity & CBSL Holdings

CBSL market liquidity remained negative throughout the week, while widening the liquidity gap and recording the lowest liquidity for the week on 31 December, amounting to Rs 148.4 billion. CBSL holdings kept fluctuating through the week, recording the highest on 26 December amounting to Rs 272.8 billion.


Foreign Interest

Foreign holding was recorded at Rs 164.5 billion, recording a drop of Rs 10.9 billion. Overall Government Securities marginally increased by Rs 202.1 billion, while foreign holding percentage for the week declined to 3.1% from its previous level of 3.5%.


Maturities for next Week

The Government Securities Market has a Treasury bill maturity amounting to Rs 19.5 billion to be settled on the week ending 11 January.


Daily Summary

Thursday (27.12.18): In the midst of continuous foreign selling, short tenor maturity [15.12.21] changed hands at intraday high of 11.60% levels, while mid tenor maturities [15.05.23] traded at 11.70% levels and [01.08.25] traded at intraday high of 11.85% levels. The overall market witnessed moderate volumes as market participants remained on the sidelines.
Friday (28.12.18): The secondary market yield curve remained broadly steady, while the overall market witnessed moderate volumes. On the back of buying interest that stemmed from local counterparties, mid to long tenure maturities, reached intraday lows with mid tenure maturities [15.12.21] trading at 11.51%, two 2023 maturities [15.05.23] and [15.07.23] at 11.65% and 11.68% respectively, while long tenure maturities, [01.08.26] traded at 11.77% and [15.06.27] at 11.78%.
Monday (31.12.18): The overall yield curve closed for the year, remaining unchanged at previous week’s closing levels, while the market witnessed thin volumes as market participants were seen remaining on the sideline. Limited activity was witnessed on [15.12.21] at 11.55%, [15.07.23] at 11.70% and [15.06.27] at 11.80%.
Wednesday (02.01.19): The market witnessed continued buying interest, with the yield curve witnessed a downward shift across all maturities amidst moderate volumes. Following maturities traded at their intraday lows; [01.05.20] at 11.00%, [01.03.21] at 11.25%, [01.08.21] at 11.33%, [15.12.21] at 11.25%, [15.05.23] at 11.55%, [15.03.25] at 11.58%, [01.08.26] at 11.55% and [15.06.27] at 11.62%. At the primary bill auction held on 02 January 2019, the six-month and one-year bills were accepted at 9.95% and 10.99% respectively, while the three-month was not offered.