Yield curve subtly dips from short to mid end

By First Capital Research

At yesterday’s weekly T-bill auction, the weighted average yield rates experienced a further decline across the board. 

The weighted average yield rates for the three-month, six-month and 12-month T-bills stood at 7.50 percent, 7.84 percent and 8.25 percent, respectively, reflecting auction yield drops of 2bps, 2bps and 9bps. Furthermore, the Central Bank offered a total of Rs.143.0 billion worth of T-bills collectively and this amount was fully subscribed.

At yesterday’s secondary market, market participants continued to maintain the persistent buying stance from recent days, causing the secondary market yield curve to taper down further from the short to mid end. Investor interest was predominantly focused on 2028, 2029, 2031 and 2033 bond maturities. At the mid-end 15.02.2028 and 15.03.2028 maturities traded at the rate of 9.70 percent, whilst 15.05.2028, 15.07.2028, 15.10.2028 and 15.12.2028 maturities traded at the rates of 9.80 percent, 9.85 percent, 9.90 percent and 10.03 percent, respectively.

Meanwhile, 2029 bond maturities namely, 15.06.2029 traded at the rate of 10.10 percent whilst both 15.09.2029 and 15.12.2029 maturities traded in the range of 10.15 percent. Meanwhile, 01.12.2031 and 01.06.2033 traded at the rates of 10.65 percent and 11.05 percent, respectively. 

On the external front, the Sri Lankan rupee appreciated further against the US dollar, closing at Rs,296.0/US dollar, compared to Rs.296.3/US dollar registered the previous day. The Central Bank holdings of government securities remained stagnant at Rs.2,511.9 billion. Overnight liquidity of the banking system contracted to Rs.172.1 billion from Rs.194.2 billion seen in the previous day.