The Domestic Operations Department (DOD) of the Central Bank of Sri Lanka was seen conducting an auction on Friday, September 24 to inject permanent liquidity into the system by way of a reverse repo auction for the first time since November 11, 2020. An amount of Rs.103.5 billion was successfully infused out of an offered amount of Rs.150 billion for period of 87 days at a weighted average rate of 6.13%, valued at September 27.
This intern saw sentiment in the secondary bond market turn positive on Friday, following a continued upward momentum during the rest of the shortened trading week ending 24th of September. The yields on maturities of 01.10.23, 01.12.24, 01.08.25 and 15.05.30 were seen hitting weekly highs of 8.00%, 8.45%, 9.26% and 10.21% respectively against its previous weeks closing levels of 7.30/90, 8.25/40, 8.50/00 and 9.90/20 driven by the outcome of the weekly Treasury bill auction and the removal of the yield guidance for the upcoming Treasury bond auctions scheduled for September 28. At the weekly Treasury Bills auction, weighted average rates were seen increasing sharply following the removal of the yield guidance for the Treasury Bill auctions.
However, buying interest on Friday saw yields dip again, reversing its upward trend as the maturities of 15.01.23, 15.03.24, and 15.10.25 changed hands at levels of 7.20%, 8.00% and 9.00%.
In money markets, the net liquidity shortfall decreased to Rs. 200.61 billion against its previous weeks Rs. 206.59 billion while the weighted average rates on overnight call money and repo averaged 5.96% and 5.94% for the week.
(References: Central Bank of Sri Lanka, Bloomberg E-Bond trading platform, Money broking companies)
Courtesy: Wealth Trust Securities Ltd