Bond Market activity dull; yields hold steady

• Secondary market T.bills see notable demand
• Rupee dips marginally

By Wealth Trust Securities

The secondary bond market commenced the week on a subdued note with low activity apart from a few trades and relatively low volumes, yesterday. The market overall saw two-way quotes move sideways, with yields continuing to hold broadly steady.

Accordingly limited trades were observed on the short tenor bonds of 01.06.25 and 01.07.25 at yields of 10.80% and 10.65% respectively. Meanwhile, trades were seen on 2027 tenors (01.05.27 and 15.09.27) within the range of 12.00% and 11.85%. Additionally, the relatively longer tenor 01.07.32 maturity traded at the 12.62%.

However, secondary market bills witnessed strong buying interest with yields edging down, on the back of substantial volumes. Shorter tenor May 2024 bills were seen trading within the range of 9.60% to 8.50%, while June 2024 bills were seen trading at 9.98%. Similarly, August 2024 bills were seen trading at 10.08% and October 2024 bills were seen trading down from 10.29% to 10.05%, which is a significant reduction compared to market two-way quotes at the close of last week.

The total secondary market Treasury bond/bill transacted volume for 10 April was Rs. 30.92 billion.

In money markets, the weighted average rates on overnight call money and Repo stood at 8.62% and 8.84% respectively as the DOD (Domestic Operations Department) of Central Bank injected liquidity by way of an overnight and 7-day term reverse repo auctions for Rs. 8.77 billion and Rs. 60.00 billion respectively at weighted average rates of 8.59% and 8.85%.

The net liquidity surplus stood at Rs. 74.97 billion yesterday as an amount of Rs. 25.18 billion was withdrawn from Central Banks SLFR (Standard Lending Facility Rate) of 9.50% against an amount of Rs. 168.92 billion being deposited at Central Banks SDFR (Standard Deposit Facility Rate) of 8.50%. 

Forex Market 

In the Forex market, the USD/LKR rate on spot contracts closed the day down at Rs. 299.00/299.10 against its previous day’s closing level of Rs. 298.50/298.55.

The total USD/LKR traded volume for 10 April was $ 60.18 million.

(References: Central Bank of Sri Lanka, Bloomberg E-Bond trading platform, Money broking companies)