Weekly Yield Movement & Volume
The bond market opened in bullish sentiment, enabled by the positive mode on the back of primary bill and bond auction outcomes. During the week, a notable downward shift was witnessed in the secondary market yield curve, while overall market witnessed moderate volumes. During the first half of the week, the rupee was seen appreciating to Rs 181.90/10, following the US$ 400 million swap facility agreement with the Reserve Bank of India. The rupee was seen depreciating again to close the week at Rs 182.35/45. At the primary bill auction, both six-month and one-year bills were accepted at weighted averages of 9.87% and 10.75% respectively, while yields dipped by 7bps and 10bps.
Liquidity & CBSL Holdings
CBSL market liquidity remained negative throughout the week, recording the lowest liquidity for the week on 7 January amounting to Rs 113.6 billion. CBSL holdings remained stagnant during the beginning of the week at Rs 68.56 billion and thereafter closed the week at Rs 160.51 billion.
Foreign holding was recorded at Rs 154.2 billion, recording a drop of Rs 3.6 billion, continuing the foreign selling since August 2018. Foreign holding percentage for the week remained stable at 3.0%.
Maturities for next Week
The Government Securities Market has a Treasury bill maturity amounting to Rs 15.9 billion for the week ending 18 January.
Thursday (10.01.19): The secondary market yield curve remained mostly unchanged for the third consecutive day as the market participants were seen remaining on the sideline adopting a wait-and-see approach ahead of bond auction to be held on [11.01.19]. On the back of mixed activities, two 2021 maturities [01.03.21] and [15.12.21] traded at 11.20-25% and at 11.30-33% levels respectively and foreign selling was witnessed on mid tenure, [15.03.25] at 11.75% while the overall market saw moderate volumes.
Friday (11.01.19): The secondary market yield curve shifted slightly downwards to close the week, amidst market witnessing high volumes. During the morning session, foreign buying interest saw [01.03.21] trading at 11.15% while foreign selling was witnessed on [01.06.26] at 11.80%. The large Rs 98.0 billion bond auction saw maturities closing at market rates, with [15.12.23] and [01.09.28] accepted at weighted averages of 11.58% and 11.73% respectively. Auction results led to renewed local buying interest in 2023 and 2028 maturities, reaching intraday lows of 11.45% and 11.65%.
Monday (14.01.19): Positive sentiment arising from the bond auction held on 11 January 2019 led to continued buying interest in short to mid tenure maturities from local counterparties leading to a downward shift in the short to belly end of the yield curve. With the buying interest, short to mid tenure maturities were seen reaching intraday lows with four 2021 maturities ([01.03.21], [01.05.21], [01.08.21] and [15.12.21]) trading at 11.00%, 11.05%, 11.05% and 11.03% respectively, while mid tenure maturities [15.03.23] traded at 11.35%,
[15.12.23] at 11.38%, [15.03.25] at 11.55% and [01.06.26] at 11.60%. CBSL announced primary bill auction offering Rs 10.0 billion and Rs 16.0 billion of six-month and one-year bills to be held on [16.01.19].
Wednesday (16.01.19): Secondary market yield curve shifted downwards amidst the buying interest emanating from both local and foreign counterparties, as the positive sentiment was seen continuing since the bond auction held on [11.01.19]. Foreign buying predominantly centered on four 2021 maturities ([01.05.21], [01.08.21], [15.10.21] and [15.12.21]) reaching intraday lows of 10.87%, 10.90%, 10.95% and 10.95% respectively while mid tenure maturities traded at daily lows with [15.12.23] at 11.25%, [15.03.25] at 11.50%, [01.06.26] at 11.50% and [01.09.28] at 11.55%, while the overall market saw high volumes. Yields of six-month and one-year dipped by 7bps and 10bps at the primary bill auction, to be accepted at weighted averages of 9.87% and 10.75% respectively while the three-month bill was not offered.