Secondary Bond market extends rally on peace deal optimism

Tuesday, 16 June 2026 05:05 - - {{hitsCtrl.values.hits}}

By Wealth Trust Securities

The Secondary Bond Market kicked off the week on a bullish note, carrying over the positive momentum witnessed towards the tail end of last week.

The market rallied strongly on news that the US and Iran had reached a peace agreement aimed at ending the Middle East conflict and reopening the Strait of Hormuz by the end of the week. This was mirrored by a sharp decline in Brent crude oil prices, easing concerns over inflation and external sector pressures.

Sentiment was further supported by reports of continued robust fiscal performance. According to the Monthly Fiscal Review Report – January to April 2026 published by the Ministry of Finance, the Budget recorded a surplus of Rs. 105 billion during the first four months of 2026 compared to a deficit of Rs. 261.6 billion during the corresponding period of 2025.

As a result, the market witnessed aggressive buying interest across the yield curve amidst elevated activity and transaction volumes. Yields declined sharply during the day and the market closed on a resoundingly positive note, with two-way quotes ending lower.

Accordingly, the 15.02.28 and 15.03.28 maturities traded lower down the ranges of 10.95%-10.90% and 11.00%-10.95% respectively. The 01.07.28 maturity traded within the range of 11.00%-10.90%. The 15.12.29 maturity traded at the rates of 11.30%-11.20%. The 2030 tenors of 01.03.30, 15.05.30 and 01.08.30 rallied strongly and traded down the ranges of intraday highs to lows of 11.35%-11.30%, 11.65%-11.40% and 11.75%-11.40%. The 15.12.32 maturity traded down the range of 11.83%-11.75% and the 15.01.33 maturity down the range of 12.00%-11.65%. The 15.03.35 maturity traded down the range of 12.25%-12.00%.

In money market, the net liquidity surplus was recorded at Rs. 39.36 billion yesterday. An amount of Rs 87.66 billion was deposited at Central Bank’s SDFR (Standing Deposit Facility Rate) of 8.25% as against an amount of Rs. 48.30 billion withdrawn from the Central Bank’s SLFR (Standing Lending Facility Rate) of 9.25%.

The weighted average rates on overnight call money and Repo were recorded at 9.20% and 9.24% respectively.

Forex market

In the Forex market, the USD/LKR rate on spot contracts closed at the rate of Rs. 333.00/334.50 as against the previous day’s closing of Rs 335.50/336.00.

The total USD/LKR traded volume for 12 June 2026 was $ 50.70 million.

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