Bond market dull ahead of auctions

• Rs. 270 b on offer at Treasury bond auctions; rupee continues its advance

By Wealth Trust Securities

The secondary bond market commenced the week on a subdued note, with a complete standstill for much of the day apart from a few transactions, as market participants adopted a wait and see stance ahead of today’s Bond auctions. Two-way quotes edged up further, in comparison to last week’s closing levels.

Accordingly, limited trades were observed on the maturities of 01.08.26 and 01.07.32 within the ranges of 11.03% to 11.06% and 12.76% respectively, on relatively slim volumes.

Today’s round of Treasury Bond auctions will have on offer a colossal total of Rs. 270 billion, making it the largest ever in Sri Lanka’s history. 

This trumps the previous record of Rs. 250 billion at the 13 November 2023 round of Treasury bond auctions. Today’s auctions will comprise of Rs. 130.00 billion from a maturity of 15 December 2026 with a coupon rate of 11.25%, Rs. 110.00 billion from a maturity of 15 December 2028 with a coupon of 11.50% and Rs. 30.00 billion from a maturity of 15 March 2031 with a coupon rate of 11.25%.

For context, at the previous round of auctions held on the 13 February 2024, the entire offered amount of Rs. 55 billion was fully taken up as the same maturities of 15.12.26 and 15.12.28 were issued at the weighted average rates of 10.81% and 11.90% respectively.

In secondary market bill transactions, March 2024 maturities were seen changing hands at 9.40% while September 2024 maturities were seen trading at 10.10%.

The total secondary market Treasury bond/bill transacted volume for 7 March was Rs. 16.79 billion.

In money markets, the weighted average rates on overnight call money and Repo stood at 9.20% and 9.27% respectively. The DOD (Domestic Operations Department) of the Central Bank injected liquidity by way of an overnight and 7-day reverse repo auction for Rs. 60.00 billion and Rs. 41.50 billion at the weighted average rates of 9.32% and 9.39% respectively.

The net liquidity deficit stood at Rs. 61.03 billion yesterday as an amount of Rs. 19.00 billion was withdrawn from Central Banks SLFR (Standard Lending Facility Rate) of 10.00% against an amount of Rs. 59.47 billion deposited at Central Banks SDFR (Standard Deposit Facility Rate) of 9.00%. 

Forex Market 

In the Forex market, the USD/LKR rate on spot contracts closed the day up at 

Rs. 306.95/307.10 against its previous day’s closing level of Rs.307.30/307.40.

The total USD/LKR traded volume for 7 March was $ 75.80 million. 

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