Government Securities Market (Week ended January 20, 2023) | Sunday Observer

Government Securities Market (Week ended January 20, 2023)

22 January, 2023

The sharp drop in the weekly Treasury bill weighted averages, developments on the IMF front with regard to its Extended Fund Facility (EFF) to Sri Lanka coupled with restriction imposed on CBSL’s Standing Deposit Facility (SDF) of 14.50% for License Commercial Banks (LCB) with effect from 16th January 2023reflected positively on the trading sentiment in the secondary bond market during the short trading week ending January 20, 2022.

At the weekly Treasury bill auction, the 182-day bill weighted average tumbled by 230 basis points to 29.07% while the weighted averages on the 91-day and 364-day maturities dipped by 107 and 79 basis points respectively to 30.08% and 28.25%. Total offered amount of Rs. 95 billion was fully subscribed at its first phase of the auction while a further amount of Rs. 23.75 billion was taken at its second phase.

In the secondary bond market, the yields of the liquid maturities of 15.05.26 and 15.09.27 were seen decreasing to weekly lows of 29.00% and 28.50% respectively against its previous weeks closing levels of 30.80/10 and 27.75/95. In addition, 01.05.24 and 15.01.25 maturities dipped to weekly lows of 30.80% and 30.25% respectively against its previous week’s closings of 32.00/25 and 31.00/25, leading to a shift downwards on the short end of the yield curve.

In money markets, the overnight net liquidity fluctuated during the week due to the restrictions imposed on CBSL’s Standing Deposit Facility while CBSL’s holding of Government Security’s decreased marginally to Rs. 2,548.99 billion from its previous weeks Rs.2,594.32 billion. The week ended with a net overnight surplus of Rs 136.92 billion while the overall liquidity was a deficit of Rs 333.59 billion.

(References: Central Bank of Sri Lanka, Bloomberg E-Bond trading platform, Money broking companies)

Courtesy: Wealth Trust Securities Ltd