Treasury rates move up ahead of Wed.’s policy rate announcement

Sri Lanka’s treasury yields kept its upward momentum ahead of Wednesday’s monetary policy review announcement. Sri Lanka’s treasury yields kept its upward momentum ahead of Wednesday’s monetary policy review announcement. The Central Bank said it sold one year treasury notes at a yield of 9.41 percent, slightly up from last week’s 9.39 percent.

Yields for three and six month paper also went up to 9.22 percent and 9.28 percent respectively from the previous auction, the bank said in a statement on Tuesday.

It said the auction was oversubscribed with bids received amounting to Rs. 17,257 million, but the bank accepted only bids worth Rs. 9,726 million.

Around Rs. 10,718 million worth of treasury paper matured this week, and the Central Bank bought Rs. 992 million of it.

Bond dealers had already factored in expectations for higher yields this week, ahead of the monetary policy review announcement due Wednesday morning.

Market players expect the Central Bank to keep the repurchase rate, used to drain money from the banking system, at 8.25 percent and the reverse repurchase rate at 9.75 percent.

Policy rates were last raised by 50 basis points in June.



Maturity



Bids



Received



Amount

accepted



Weighted Average  Yield

(%)


 



 (Rs.

m
n.)



(Rs.

m
n.)



This Week



Last Week

Three-months


 9,186


 6,965


 9.22


 9.17

Six-months


 2,378


 418


 9.28


 9.22

One-year

 5,693

 2,343


 9.41


 9.39



 Total



 17,257



 9,726



9.27



 9.24

-LBO Newsdesk: LBOEmail@vanguardlk.com