By First Capital Research
Weekly Yield movement & Volume
Bond market activity remained relatively moderate during the past week, following the last Bill Auction held on 15 November 2017, illustrating a slowdown in the upward movement in yields. Heavy slowdown in activity was witnessed on Monday ahead of the Bill Auction. On Wednesday the market witnessed steep buying interest, specifically in the short to mid tenures, on expectations of a dip in rates in the bill auction.
Liquidity & CBSL Holdings
Market liquidity remained volatile over the past week, but remained around the LKR 25-28 billion mark, while the CBSL Holdings also registered a slow deterioration. However, a sudden drop in market liquidity, coupled with a jump in CBSL Holdings, was witnessed on 17 November 2017, which could be linked to an outflow for the Government.
Foreigners remained net foreign buyers for the 10th consecutive week, adding a further LKR 1.4 billion to foreign holding. However, with the overall outstanding Government securities stock increasing, overall foreign holding percentage remained at 6.3% as at 15 November 2017.
Maturities for next week
The Government securities market has Treasury Bill maturities on LKR 27 billion, which needs to be settled on 30 November 2017. Further, the Government also needs to settle LKR 22.3 billion of Treasury Bond interest falling due 1 December 2017, which will be settled on 30 November 2017, which is the last working day for settlement.