Secondary Bond market continues bearish trend

Friday, 5 June 2026 03:16 - - {{hitsCtrl.values.hits}}

By Wealth Trust Securities

The secondary Bond market remained subdued yesterday, with yields edging higher as bearish sentiment persisted following the previous day’s Treasury Bill auction results.

Investors remained cautious as the increase in Bill yields since the recent Monetary Policy rate hike has significantly exceeded the magnitude of the Monetary Policy adjustment of 100 basis points, highlighting persistent upward pressure on market interest rates.

Sentiment was also influenced by mixed geopolitical signals and continued volatility in global energy markets. The resulting risk-off environment continued to exert upward pressure on domestic yields as market participants assessed the potential implications for inflation, external balances, and broader macroeconomic conditions.

Against this backdrop, secondary market activity was limited although transaction volumes were supported by the execution of block trades.

Accordingly, the 15.02.28 and 15.03.28 maturities traded at the rates of 11.95% each. The 01.05.28 and 01.07.28 maturities traded at the rates of 11.95%-12.00% and 11.90%-12.00%. The 01.08.30 maturity traded at the rate of 12.30%. The 15.06.34 maturity traded at the rate of 13.15%. The 15.03.35 and 15.06.35 maturity traded at the rates of 13.25% and 13.30% respectively. The 15.08.36 maturity traded at the rates of 13.28%-13.29%.

In the money market, the weighted average call money rate remained above 9.00% for a sixth consecutive day, recording 9.16% yesterday while the weighted average REPO rate stood at 9.20%.

The net liquidity surplus was recorded at Rs. 111.94 billion. An amount of Rs 119.90 billion was deposited at Central Bank’s SDFR (Standing Deposit Facility Rate) of 8.25% as against an amount of Rs. 42.95 billion withdrawn from the Central Bank’s SLFR (Standing Lending Facility Rate) of 9.25%. In addition, the Domestic Operations Department (DOD) of the Central Bank of Sri Lanka drained out an amount of Rs. 25 billion by way of overnight Repo auction at a weighted average rate of 8.75% as well as a short term Repo auction at weighted average rate of 8.75% for an amount of Rs. 10 billion.

Forex market

In the forex market, the USD/LKR rate on spot contracts closed at Rs. 336.75/337.50 as against the previous day’s closing of Rs 335.00/337.00. The total USD/LKR traded volume for 3 June 2026 was $ 98 million.

(References: Public Debt Management Office- Ministry of Finance, Central Bank of Sri Lanka, Bloomberg E-Bond trading platform, Money broking companies)