Cautious approach emerges ahead of the bond auction

By First Capital Research

In yesterday’s weekly T-Bill auction, the weighted average yield rates experienced a slight further decline.
The weighted average yield rates for the 3M, 6M, and 12M T-Bills stood at 7.57%, 7.87%, and 8.35%, respectively, reflecting auction yield drops of 4bps, 3bps, and 1bps. 

Furthermore, CBSL offered a total of Rs. 140.0 bn worth of T-Bills collectively, and this amount was fully subscribed.
In the secondary market, market participants adopted a cautious approach ahead of the T-Bond auction, resulting in moderate trading volumes.

Amongst the traded maturities notable trades were recorded in 2027, 2028, 2029 and 2030 bond maturities. Accordingly, at the short end 15.09.2027 maturity traded at the rate of 9.40%. 

Whilst towards the belly end 15.03.2028, 01.07.2028 and 01.09.2028 maturities traded at the rates of 10.05%, 10.27% and 10.30%, respectively. 

Furthermore, 15.07.2029, 15.09.2029 and 15.12.2029 traded at the rates of 10.76%, 10.77% and 10.80% respectively. Additionally, 15.05.2030 and 15.10.2030 bond maturities traded at the rates of 11.00% and 11.12% respectively.

The CBSL holdings of government securities remained unchanged, closing at Rs. 2,511.92bn yesterday. Overnight liquidity in the banking system contracted to Rs. 151.1bn from Rs. 159.7bn recorded the previous day.