Secondary Bond market yields continue to decrease ahead of T-Bond auction

Thursday, 29 May 2025 05:00 - - {{hitsCtrl.values.hits}}

Rs. 162.50 b T-Bill auction fully subscribed

By WealthTrust Securities

The weekly Treasury Bill auction conducted yesterday was fully subscribed. The entire Rs. 162.50 billion on offer was successfully raised in the first phase in competitive bidding. The total bids received exceeded the offered amount by 2.31 times.

This marks the first auction since the Central Bank of Sri Lanka slashed the Overnight Policy Rate by 25 basis points. Accordingly, the weighted average yield rate on the 91-day tenor declined by 10 basis points to 7.55%, the 182-day tenor by 20 basis points to 7.77% and the 364-day tenor by 31 basis points to 7.98%.

The Phase II subscription for all three tenors is now open until 3 p.m. of business day prior to settlement date (i.e., today) at the WAYRs determined for the said ISINs at the auction.

Meanwhile, the secondary bond market yesterday continued to rally for the fifth straight session. Strong buying interest was seen pushing yields down further. The sustained bullish momentum was underpinned by robust market activity and transaction volumes.

The 15.12.26 maturity was seen trading down the range of 8.25%-8.10%. The 01.05.27, 15.09.27 and 15.10.27 maturities were seen trading down the ranges of 8.57%-8.40%, 8.70%-8.62% and 8.65% respectively. The 01.07.28 maturity traded down the range of 9.15%-9.00% and the 15.10.28 maturity was seen trading at the rate of 9.07%. The 15.06.29, 15.09.29 and 15.12.29 maturities were seen trading down the range of intraday highs and lows of 9.55%-9.50%, 9.57%-9.51% and 9.65%-9.50% respectively. The 15.05.30 and 15.03.31 maturities traded down the ranges of 9.67-9.65% and 10.00%-9.85% respectively. The 15.12.32 maturity dropped down the range of 10.40%-10.20%.

This comes ahead of the Rs. 200.00 billion Treasury Bond auction scheduled to be held today, 29 May. The auction will be comprised of:

1. Rs. 40.00 billion from a 1 July 2028 Maturity bearing a coupon rate of 09.00%

2. Rs. 80.00 billion from a 15 December 2029 Maturity bearing a coupon rate of 11.00%

3. Rs. 80.00 billion from a 15 September 2034 Maturity bearing a coupon rate of 10.25%

The settlement for which will be held on 2 June 2025.

For reference, the previous Treasury Bond auctions held on 9 May concluded on a bullish note, with rates coming below market expectations. The full Rs. 80.00 billion on offer was successfully raised at the first phase in competitive bidding. Total bids exceeded the offered amount by 2.98 times. The 15.10.29 maturity (10.35% coupon) was fully subscribed at a weighted average yield of 10.22%. Similarly, the 01.11.33 maturity (09.00% coupon) raised the entire maturity-wise offered amount of Rs. 45.00 billion at a yield of 10.97%.

In money markets, the weighted average rates on overnight call money and Repo stood at 7.75% and 7.75% respectively.

The net liquidity surplus stood at Rs. 196.06 billion yesterday. No funds were withdrawn from the Central Bank’s SLFR (Standing Lending Facility Rate) of 8.25%.

Forex market

In the Forex market, the USD/LKR rate on spot contracts closed the day appreciating to Rs. 299.45/299.65 as against its previous day’s closing level of Rs. 299.80/299.87. The total USD/LKR traded volume for 27 May 2025 was $ 125.25 million.

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

Discover Kapruka, the leading online shopping platform in Sri Lanka, where you can conveniently send Gifts and Flowers to your loved ones for any event including Valentine ’s Day. Explore a wide range of popular Shopping Categories on Kapruka, including Toys, Groceries, Electronics, Birthday Cakes, Fruits, Chocolates, Flower Bouquets, Clothing, Watches, Lingerie, Gift Sets and Jewellery. Also if you’re interested in selling with Kapruka, Partner Central by Kapruka is the best solution to start with. Moreover, through Kapruka Global Shop, you can also enjoy the convenience of purchasing products from renowned platforms like Amazon and eBay and have them delivered to Sri Lanka.