5-year bond yield hits 10% for first time in almost 2 months

• 2-year bond yield edges above 90% after a lapse of 5 weeks

By Wealth Trust Securities

The upward momentum in secondary market bond yields continued, recording its fourth consecutive day of increases on the back of continued selling interest by both local and foreign participants.  

Interestingly, the market favourite 5-year maturity was seen edging above the psychological level of 10% for the first time since 25 June as the 15.03.24 and 15.06.24 maturities hit intraday highs of 10.02% and 10.04% respectively. 

Furthermore, the two-year or 2021 maturities were seen edging above 9.00% for the first time since 9 July with the 01.05.21, 01.08.21 and 15.12.21 maturities changing hands within the range of 9.15% to 9.20%. 

In addition, the 2023s (i.e. 15.07.23 and 15.12.23), 01.08.26, 15.01.27, 01.05.29 and 15.05.30 maturities were also traded at highs of 9.85%, 9.90%, 10.21%, 10.22% each and 10.40% respectively as well.

The total secondary market Treasury bond/bill transacted volumes for 16 August was Rs. 17.93 billion. 

In money markets, overnight call money and repo rates averaged 7.80% and 7.91% respectively yesterday as the overall net liquidity surplus on an overnight basis increased to Rs. 14.18 billion.  

The Open Market Operations (OMO) Department of Central bank injected amounts of Rs. 7.20 billion, Rs. 4.50 billion and 2.75 billion by way of overnight, seven-day and 14-day reverse repo auctions at weighted averages of 7.75%, 7.73% and 7.55% respectively. 

In addition, an amount of Rs. 0.25 billion was injected by way of an outright auction to purchase Treasury bills for duration of 220 days at a weighted average of 7.81%.

Rupee dips further

The Interbank USD/LKR rate on spot contracts depreciated yesterday to close the day at Rs. 177.40/55 against its previous day’s closing levels of Rs. 177.15/25 on the back of buying interest by banks. The total USD/LKR traded volume for 16 August was $ 78.97 million.

Given are some forward USD/LKR rates that prevailed in the market: one month – 178.00/15; three months – 178.85/15; six months – 180.50/80.