Secondary Bond market rallies; yields drop

Friday, 16 May 2025 04:42 - - {{hitsCtrl.values.hits}}

Monetary Policy Review No.3 announcement date advanced to 22 May
Rupee appreciates

By Wealth Trust Securities

The Secondary Bond market yesterday initially saw rates dip down lower specifically on 2028-2029 tenors, while the rest of the yield curve remained broadly steady. Despite slight selling pressure from profit taking, trades remained largely range bound during the mid-trading hours. However, following the announcement that the Monetary Policy Review: No. 3 of 2025, which was initially scheduled to be announced on 28 May, has been advanced to Thursday, 22 May at 7.30 a.m. The market rallied and yields dropped further. Strong demand was seen on 2029 tenors. As a result, secondary market two-way quotes were seen closing the day notably lower. Trading activity and transaction volumes were seen at robust levels.

Accordingly, the 01.06.26 maturity traded at the rate of 8.40%. The 15.03.28, 01.07.28, 15.10.28 and 15.12.28 traded at the rates of 9.70%, 9.77%-9.75%, 9.85% and 9.87%-9.85%. The 15.06.29,15.09.29 and 15.12.29 maturities traded down the ranges of 10.14%-10.13%, 10.16%-10.15% and 10.18%-10.13% respectively. The 15.03.31 traded down the range of 10.68%-10.64%. The 15.12.32 and 15.03.35 maturities were seen trading at the rates of 10.75% and 11.05% respectively.

The total secondary market Treasury Bond/Bill transacted volume for 14 May was Rs. 100.20 billion.

In money markets, the weighted average rates on overnight call money and Repo stood at 7.99% and 8.00% respectively.

The net liquidity surplus stood at Rs. 123.84 billion yesterday. Rs. 5.60 was withdrawn from the Central Bank’s SLFR (Standing Lending Facility Rate) of 8.50%, while an amount of Rs. 129.44 billion was deposited at Central Bank’s SDFR (Standard Deposit Facility Rate) of 7.50%.

Forex Market

In the Forex market, the USD/LKR rate on spot contracts were seen appreciating to close at Rs. 298.53/298.58 as against 298.60/298.70 the previous day.

The total USD/LKR traded volume for 14 May was $ 87.73 million.

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

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