Auction yields taper down significantly | Sunday Observer

Auction yields taper down significantly

19 March, 2023

The secondary market reversed the persistent bullish sentiment during the previous week, as selling interest loomed over profit booking resulting in secondary market yields to edge higher on short to belly end. However, yields at the primary market auctions tapered down on a sizeable note.

The week opened with renewed selling interest after continuous buying was observed during the previous week. Activities were largely witnessed on 2024, 2025, 2026 and 2027 maturities while they inched higher amid active selling.

Perceptible institutional participation was observed during the week as supply-side pressure further intensified on the market due to increased bonds offered to government creditors, to settle the money owed by the Government.   

At the primary bond auction, only 61.3% of the total offered of Rs. 180.0 bn was accepted, where Rs. 110.0 bn offered from 01.05.27 was fully accepted at a weighted average yield of 28.11% while most of the bids for the shorter tenure, 15.11.24 maturity were rejected and only Rs. 441.0 mn was accepted at a weighted average yields of 29.99%.

CBSL conducted its weekly Treasury Bill auction and raised Rs. 120.0 bn, as the total auction was fully subscribed and accepted. With continuous signals from Central Bank on easing future interest rates and a possible signing of the IMF board level agreement in the coming weeks, weighted average yields dipped across the board and touched a near eighth-month low, as three-month bill yield declined by 81bps to 27.94% while six-month and 12-month bills also recorded a sharp decline of 43bps and 51bps to 27.34% and 25.92%.         

In the Forex market, the Rupee witnessed a sizeable depreciation against the greenback with the rupee being recorded at Rs. 327.1 compared to Rs. 319.6 recorded during the beginning of the week reversing the continuous appreciation observed last week.

Courtesy: First Capital Research (March 15)