Thursday Apr 02, 2026
Thursday Apr 02, 2026
Wednesday, 18 March 2026 00:00 - - {{hitsCtrl.values.hits}}
By Wealth Trust Securities
The secondary Bond market yesterday continued to witness upward pressure on yields, extending the bearish sentiment observed at the start of the week, driven by a combination of global and domestic developments.
Geopolitical tensions in the Middle East remained the key overhang, with continuing and escalating conflict heightening global risk aversion. At the same time, Brent crude prices remained elevated above $ 100 per barrel amid disruptions to shipping through the Strait of Hormuz.
Furthermore, rising US Treasury yields and a strengthening US dollar have tightened global financial conditions, which could translate to reduced appetite for frontier market assets.
Domestically, the re-emergence of long fuel queues, alongside the implementation of shorter working weeks, has dampened economic activity expectations. Concerns over potential power interruptions have further reinforced downside risks and dampening sentiment. Against this backdrop, market activity remained subdued, with yields trending higher across the curve amid continued selling pressure.
Accordingly, the 15.03.31 maturity traded higher at the rate of 10.00% and the 15.06.34 maturity traded up the range of 10.82%-10.85%.
Nevertheless, demand for the shorter tenure continued with 01.05.27 and 15.09.27 maturities trading at the rates of 8.35% and 8.50% respectively.
In addition, secondary market bills saw transactions with July 2026 maturities were seen trading at the rates of 7.76%, January 2027 the rates of 8.15%-8.19% and February 2027 at the rate of 8.18%-8.20%.
These developments come ahead of the weekly Treasury Bill auction scheduled for today which will have on offer a total amount of Rs. 120 billion. The auction will be comprising of Rs. 45 billion in 91-day Bills, Rs. 50 billion in 182-day Bills, and Rs. 25.00 billion in 364-day Bills. The offered amount is below the maturing volume, which is estimated at around Rs. 142.44 billion.
For context, the weekly Treasury Bill auction conducted last Wednesday (11) saw weighted average yields decline marginally. Accordingly, the rate on the 91-day Bill dipped by two basis points to 7.61% and the rate on the 182-day Bill edged lower by one basis point to 7.91%. However, the 364-day Bill saw its yield hold static at 8.23%. The auction was undersubscribed at the first phase in competitive bidding. The bid-to-cover ratio stood at 2.33 times. An additional amount of Rs. 9 billion was raised from the second phase. Accordingly, the aggregate accepted amount of the issuance was Rs. 105.72 billion.
The total secondary market Treasury Bond/Bill transacted volume for 16 March was Rs. 6.03 billion.
In money markets, the net liquidity surplus was recorded at
Rs.258.20 billion yesterday. The Domestic Operations Department (DOD) of the Central Bank of Sri Lanka was seen draining out an amount of Rs. 100 billion by way of overnight Repo auction at a weighted average rate of 7.53% while an amount of Rs. 158.42 billion was deposited at Central Bank’s SDFR (Standing Deposit Facility Rate) of 7.25%. An amount of Rs. 0.22 billion was withdrawn from the Central Bank’s SLFR (Standing Lending Facility Rate) of 8.25%.
The weighted average rates on overnight call money and Repo stood at 7.58% and 7.60% respectively.
Forex market
The USD/LKR rate on spot contracts was seen appreciating slightly, to close the day at Rs. 311.30/311.40 as against the previous day’s closing level of
Rs. 311.50/311.60.
The total USD/LKR traded volume for 16 March was
$ 24.85 million.
(References: Central Bank of Sri Lanka, Bloomberg E-Bond trading platform, Money broking companies)
