Secondary Bond market activity picks up; two-way quotes close broadly steady

• Feb NCPI at 5.10% YoY; Rupee gains slightly

By Wealth Trust Securities

The secondary bond market activity increased yesterday, with yields initially moving up. However, upon the release of the news that Sri Lanka had reached a staff level agreement for the next tranche of the IMF Extended Funding Facility program, yields were seen moving back down. As such, two-way quotes were seen closing the day mostly unchanged compared to the previous day. Trading continued to be centered on 2026-2028 tenors. Accordingly, the popular 2028 tenors (01.07.28 and 15.12.28) were seen declining to intraday lows of 12.10% after touching intraday highs of 12.19%. Similarly, the popular 2026 tenors of (01.06.26, 01.08.26 and 15.12.26) were seen dropping to intraday lows of 11.30% from intraday highs of 11.40%. Additionally, trades were observed on the 01.05.27, and 01.07.32 maturities within the ranges of 11.85% to 11.78% and 12.30% respectively.

In the secondary bill market April 2024 maturities were seen trading at the rate of 10.00%. Whereas June 2024 maturities (approximately 3 months) were seen trading at 10.30% to 10.20% and September 2024 (approximately 6 months) maturities were seen changing hands at levels of 10.40%.

On the inflation front, the National Consumer Price Index -NCPI (Base: 2021=100) or National inflation for the month of February 2024 was recorded at 5.10% on its point to point as against 6.50% recorded in January 2024.

The total secondary market Treasury bond/bill transacted volume for 20th March was Rs. 82.91 billion.

In money markets, the weighted average rates on overnight call money and Repo stood at 9.15% and 9.49% respectively while the net liquidity stood at a deficit of Rs. 5.28 billion yesterday.

The DOD (Domestic Operations Department) of Central Bank injected liquidity by way of an overnight reverse repo auction for LKR 30.03 billion at the weighted average rate of 9.08%. An amount of Rs. 4.04 billion was withdrawn from Central Banks SLFR (Standing Lending Facility Rate) of 10.00 while an amount of Rs. 28.79 billion was deposited at the SDFR (Standing Deposit Facility Rate) of 9.00%.

Forex Market 

In the Forex market, the USD/LKR rate on spot contracts closed the day appreciating further to Rs. 303.85/303.95 yesterday, against its previous day’s closing level of Rs. 304.00/304.20.

 The total USD/LKR traded volume for 20th March was US $ 31.65 million. 

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