Monday Aug 03, 2026
Monday Aug 03, 2026
Monday, 3 August 2026 00:00 - - {{hitsCtrl.values.hits}}
By Wealth Trust Securities
The secondary Bond market began the shortened trading week ending 31 July on a cautious note, with yields moving higher across selected maturities as participants positioned ahead of the Rs. 250 billion Treasury Bond auction. Activity remained relatively subdued during the first half of the week, although transaction volumes were supported by several block trades.
Sentiment shifted decisively following Thursday’s Treasury Bond auction. The elevated yields established at the auction, triggered a wave of aggressive buying across the secondary market. The resulting rally pushed yields below the prevailing pre-auction closing levels, as strong institutional demand absorbed the fresh supply.
The bullish momentum extended into Friday, with sustained buying interest driving yields lower across the curve. Market activity and transaction volumes remained robust, while two-way quotes closed below the previous week’s levels along majority of the yield curve.
In terms of the secondary Bond market trade summary, the 15.12.26 traded down the range of 10.05%–9.90%. In the 2028 space, the 15.10.28 traded down from an intraweek high of 10.77% to a low of 10.50%, while the 15.12.28 changed hands at the rate of 10.75%. Moving into the 2029 segment, the 15.09.29 changed hands down the range of 11.23% to 11.00%.
In the 2030 space, the 01.07.30 traded down from an intraweek high of 11.60% to a low of 11.43%, while the 01.08.30 traded down from an intraweek high of 11.77% to a low of 11.35%. Similarly, the 15.10.30 traded down from an intraweek high of 11.68% to a low of 11.40%.
Further along the curve, the 01.02.31 traded down from an intraweek high of 11.88% to a low of 11.60%. The 15.01.33 traded down from an intraweek high of 12.25% to a low of 12.00%. At the longer end, the 15.10.34 traded down from an intraweek high of 12.35% to a low of 12.20%. The 15.08.36 traded down from an intraweek high of 12.75% to a low of 12.60%, while the 01.07.37 traded down from an intraweek high of 12.90% to a low of 12.60%.
At the weekly Treasury Bill auction held on Tuesday, the weighted average yields on the shorter tenors dropped for the third consecutive week. Accordingly, the yield on the 91-day tenor declined by 09 basis points to 9.86% and the 182-day maturity dropped by 3 basis points to 10.21%. However, the 364-day maturity held steady at 10.20%.
The auction successfully raised the full Rs. 140 billion offered at the first phase of competitive bidding. Maturity-wise, the shorter tenors raised more than or equal to their respective amounts offered, while the 1-year tenor raised less than the amount offered. The bids received exceeded the offered amount by 2.09 times. A further amount of Rs. 14 billion was raised at phase two out of a total demand of Rs. 41.32 billion.
Subsequently, at the round of Treasury Bond auctions conducted on Thursday, the entire offered amount of Rs. 250 billion was raised at phase-one of the auction in competitive bidding. Maturity-wise each tenor raised exactly its respective offered amount. The Weighted averages recorded a mixed bag of outcomes as against its pre-auction rates, with the 2031 coming in below market levels, the 2034 at market levels while the 2036 and 2037 were above market levels.
The bids received-to-accepted amount ratio stood at 2.43 times, a remarkable feat given the scale of the auction.
Maturity-wise the results were as follows: The shorter tenor 01.02.2031 maturity was issued at a weighted average yield of 11.90%; the 15.10.2034, maturity was issued at the weighted average yield of 12.42%; the longer tenor 15.08.2036 maturity came in at a weighted average yield of 12.91%; Finally, the 01.07.2037 maturity was issued at the rate of 13.01%. A further amount of Rs. 25 billion was raised at its direct issuance window from total bids of Rs. 148.10 billion received.
Furthermore, foreign portfolio investments in rupee-denominated Government securities recorded a strong weekly inflow of Rs. 6.44 billion for the week ending 30 July and continued its steady upward trajectory. This lifted the foreign holdings to an over three-year high of Rs. 188.82 billion—the highest level since June 2023—and marked the eighth consecutive week of net inflows.
In the Money Market, the total outstanding liquidity surplus stood at Rs. 183.34 billion at the end of the week, increasing as against its previous week’s Rs. 163.07 billion. The weighted average interest rates on Call Money and Repo were recorded at 9.01% and 9.03% respectively at the close of the week.
On the inflation front headline inflation, as measured by the Colombo Consumer Price Index (CCPI), accelerated to 7.3% year-on-year in July 2026, up from 6.8% in June, according to the Department of Census and Statistics.
Forex market
In the forex market, the USD/LKR rate on spot contracts closed the week appreciating to Rs. 335.65/335.80 as against its previous week’s closing of Rs. 336.25/336.35. Intraweek the Rupee strengthened to a high of Rs. 335.75 and a low of Rs. 336.25.
The daily USD/LKR average traded volume for the first four trading days of the week stood at $ 112.55 million.
(References: Public Debt Management Office - Ministry of Finance, Central Bank of Sri Lanka, Bloomberg E-Bond Trading Platform, Money Broking Companies)
