Secondary Bond market yields decline

Monday, 5 May 2025 04:34 -     - {{hitsCtrl.values.hits}}

  • T-Bond auction records positive outcome
  • T-Bill auction rates record mixed results
  • Foreign holdings in Rupee treasuries increase further
  • Rupee appreciates

By WealthTrust Securities


The Secondary Bond market for the week ending 2 March 2025 started off on a positive note and saw yields decline throughout the week despite bouts of marginal profit taking. The end of the week in particular saw a notable drop on the back of aggressive buying interest. Overall market activity and transaction volumes were seen at healthy levels. As a result, two-way quotes were seen ending the week lower.

The 15.09.27 maturity traded down the range of 9.60%-9.50% intraweek. The 15.10.28 maturity down the range of 10.05%-9.94%. The 15.09.29 and 15.12.29 maturities traded down the range of intraweek highs to lows of 10.40%-10.30% and 10.48%-10.35% respectively. The 15.03.31 maturity was seen trading down the range of 10.92%-10.80%.

The Treasury Bond auctions held last Monday (28 April) concluded on a strong note, with the full Rs. 155.00 billion on offer successfully raised across both phases, supported by bullish sentiment in the secondary market. Yields closely matched pre-auction market rates, with total bids exceeding the offer by 2.91 times. The 15.06.29 maturity (11.75% coupon) was fully subscribed in the first phase at a weighted average yield of 10.30%. Similarly, the 15.03.31 maturity (10.25% coupon) raised its entire Rs. 55.00 billion at a yield of 10.96%. While the 15.03.35 maturity saw a lower initial subscription of 39.40% (Rs. 15.76 billion) at a yield of 11.22%, the balance was successfully raised in the second phase, resulting in a fully subscribed overall auction.

An additional amount of Rs 11.50 billion was raised at the second phase of the auction.

The weekly Treasury Bill auction conducted last Tuesday (29 April) saw the entire Rs 145.00 billion offered successfully raised at the 1st phase, in competitive bidding. This marks the first instance in six straight weeks where a Treasury Bill auction was fully subscribed at the first phase. Total bids received exceeded the offered amount by 1.86 times. The auction saw weighted average yield rates exhibit mixed results. Accordingly, the weighted average rates on the 91-day tenor increased by 03 basis points to 7.65% and the 364-day tenor rose by 01 basis point to 8.30%. However, the weighted average rate on the 182-day tenor declined by 01 basis point to 7.97% Maturity-wise the 91-day tenor went undersubscribed. The shortfall was bridged by the 182-day and 364-day tenors which raised more than respective offered amounts. As a result, 92%+ of the total amount raised was attributed to the longer tenor maturities.

Meanwhile, the foreign holding in Rupee Treasuries recorded a net inflow for the second consecutive week amounting to Rs 600.00 million, and as a result the total holding increased to Rs. 91.75 billion as at 30 April 2025.

Meanwhile, the Colombo Consumer Price Index – CCPI (Base: 2021=100) for the month of April was recorded at – 2.00% on a year-on-year basis as against – 2.60% recorded in March. The annual average as at April was -1.10%.

The daily Secondary market Treasury Bond/Bill transacted volumes for the first three days of the week averaged at Rs. 41.60 billion. 

The total outstanding liquidity surplus in the inter-bank money market increased to Rs. 163.28 billion as at the week ending 25 April, 2025, from Rs. 120.76 billion recorded the previous week. The weighted average interest rates on call money and repo were recorded within the ranges of 7.97%-7.98% and 7.98%-7.99% respectively. 

The Central Bank of Sri Lanka’s (CBSL) holding of Government Securities was registered at Rs. 2,509.42 billion as at the 2 May 2025, down from the previous week’s closing level of Rs. 2,511.92.



Forex market

In the Forex market, the USD/LKR rate on spot contracts was seen appreciating, to close the week at Rs. 299.48/299.52 as against the previous week’s closing level of Rs. 299.65/299.75 and subsequent to trading at a high of Rs. 299.45 and a low of Rs. 299.85.

The daily USD/LKR average traded volume for the first four trading days of the week stood at $ 104.37 million. 

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

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