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WEEKLY GOVERNMENT SECURITIES MARKET – 16-12-2018

Investment in Sri Lanka

Weekly Yield movement & Volume

In the secondary market, the yield curve witnessed a notable downward shift during the week with the gradual easing off of political instability, while the bullish sentiment was further supported by the results of the weekly Treasury bill auction held on 19 December, where weighted averages on the 182-day and 364-day maturities decreased by 4 basis points each for the first time in three weeks.
Further, the overall market witnessed moderate to large volumes, as market participants remained active amidst volatility in yields. Heavy buying interest was dominated by local counter-parties, completely absorbing foreign selling pressure. Meanwhile, the weekly T-bill auction on 26 December wasn’t held; the next auction will be held on 2 January 2019.


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 24 December, amounting to Rs 103.9 billion. CBSL holdings remained almost stable during the early part of the week and spiked to Rs 272.8 billion on 26 December.


Foreign Interest

Foreign holding was recorded at Rs. 175.4 billion, recording a drop of Rs. 670.0 million. Overall Government Securities increased by 1.1%, while foreign holding percentage for the week remained stable at 3.5%.


Maturities for next week

The Government Securities Market has a Treasury bill maturity amounting to Rs. 15.0 billion and bond interest amounting to Rs. 44.8 billion to be settled on the week ending 4 January 2019.


Daily Summary

Thursday (20.12.18): With the political instability easing off, the secondary market yield curve was seen slightly shifting downwards, while overall market witnessed moderate volumes.
Buying interest was seen on the short end of the curve with [01.08.21] and [15.12.21] trading at 11.55%-11.65% levels, while mid-tenure maturities [15.05.23] traded at 11.75%. At the long end of the curve, [01.08.26] and [15.06.27] were seen trading at 11.85%-11.90% levels.
Friday (21.12.18): Continued buying interest witnessed from local counterparties shifted the secondary market yield curve slightly downwards across the board, while overall market witnessed moderate volumes.

Short- to mid-tenure maturities traded at intraday lows on the following maturities: [01.03.21] at 11.36%, [01.05.21] at 11.40%, [01.08.21] at 11.45%, [15.10.21] at 11.45%, [15.12.21] at 11.47%, [15.05.23] at 11.57%, [15.07.23] at 11.62%, [01.08.26] at 11.65% and [15.06.27] at 11.70%.
Monday (24.12.18): The secondary market yield curve remained mostly unchanged with low volumes amidst sluggish market participation. Short- to mid-tenure maturities traded at the following rates: [01.03.21] at 11.35%, [01.08.21] at 11.45%, [15.12.21] at 11.48%, [15.05.23] at 11.60%, [01.08.26] at 11.68% and [15.06.27] at 11.75%.
Wednesday (26.12.18): The secondary market yield curve remained almost unchanged, while the overall market witnessed large volumes with a mix of activities, amidst foreign selling offsetting local buying. In the absence of a T-bill auction, short tenure maturity [15.12.21] changed hands at 11.50-60% levels while mid-tenure maturities, [15.05.23] traded at 11.60-70% levels and [01.08.26] traded at 11.65-75% levels. (FCH PLC)