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Weekly Government Securities Market – 16-12-2018

Stock Brokers Sri Lanka

Weekly Yield movement & Volume

In the secondary market, the yield curve shifted slightly downwards compared to the previous week, mainly on shorter-and longer-tenure maturities. Limited activities were witnessed during the week, resulting in low volumes as market participants remained on the sidelines amidst the political uncertainty and long-pending Supreme Court decision.  At the primary auction held on 12 December, yields of six-month and one-year bills were accepted at 10.03% and 11.24%, slightly higher than previous closing levels. Furthermore, Rs 50.0 billion in Treasury Bonds are to be issued through an auction on 13 December 2018.

 

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 7 December, amounting to Rs 87.6 billion. CBSL holdings slightly declined and remained stagnant at Rs 66.8 billion during the week.

 

Foreign Interest

Foreign holding was recorded at Rs 180.9 billion, recording a drop of Rs 17.0 billion. Overall, Government Securities marginally increased by Rs 434.0 million, while foreign holding percentage for the week declined to 3.6%.
Maturities for next Week
The Government Securities Market has a Treasury bill maturity amounting to Rs 17.5 billion to be settled on the week ending 21 December.

 

Daily Summary

Thursday (06.11.18): The overall secondary market yield curve shifted slightly downwards as the buying interest continued across the yield curve in-spite of the prolonged political upheaval. Short to long tenure maturities were seen reaching intraday lows, on the back of buying that stemmed from local counterparties. The one-year bill traded at 11.10%, while short-tenure maturities, [01.07.19] and [15.09.19] traded at day’s lows of 10.08% and 10.50%, [01.05.20] at 11.30%, [01.08.21] at 11.56%, and [15.12.21] at 11.70%, while mid-tenure maturities, [15.05.23] at 11.70%, [15.03.25] at 11.75%, [01.08.26] at 11.95%, [15.06.27] at 12.00% and long-tenure maturity [01.09.28] at intraday low of 12.30%. Foreign selling was witnessed on [15.05.23] at 11.75%, while market witnessed moderate volumes.

 
Friday (07.11.18): The secondary market yield curve shifted slightly downwards on the back of buying interest, while the overall market witnessed thin volumes. Buying interest stemmed from local counterparties predominantly centered on short-tenure maturities. Short-tenure maturities, [01.07.19] traded at 10.20%, [01.03.21] at 11.45%, [15.12.21] at 11.60%, while mid-tenure maturities, [15.05.23] traded at 11.60%, [01.08.26] at 11.90% and [15.06.27] at 11.95% with limited activity levels.

 
Monday (10.12.18): The secondary market yield curve remained unchanged while the overall market was at a complete standstill, as the market participants remained on the sideline amidst the uncertainty in the political front with the long pending Supreme Court decision. CBSL announced a primary bond auction offering Rs 25.0 billion each on [15.12.21] and [01.08.26] maturities on 13 December 2018.

 
Tuesday (11.12.18): The secondary market continued to remain at an almost standstill as the market participants remained on the sideline amidst prolonged uncertainty prevailing in the political front. However, quoting was witnessed on mid tenure maturities at higher levels amidst sluggish investor sentiment ahead of primary bill and bond auctions to be held this week. Limited activity was witnessed on the six-month bill at 10.00% with considerable volumes.

 
Wednesday (12.12.18): The secondary market yield curve shifted slightly upwards, falling in line with the primary bill auction results. At the primary auction, yields of six-month and one-year bills were accepted at 10.03% and 11.24%, slightly higher than previous closing levels. Limited activity was centered on short end of the curve with [01.05.19] trading at 10.00% and [01.07.19] at 10.10%. The overall market witnessed thin volumes with the prevailing political uncertainty, as market participants remained on the sideline.