Secondary Bond market yields edge up; activity remains muted

Tuesday, 29 July 2025 04:35 - - {{hitsCtrl.values.hits}}

Rs. 122 b Treasury Bond auction in focus
Rupee depreciates

By Wealth Trust Securities

The Secondary Bond market yesterday kicked off the week on a negative note as yields were observed edging upwards on the back of thin volumes muted market activity. Market participants were largely seen sticking to the sidelines ahead of the Treasury Bond auctions due today. Trading was primarily focused on short-tenor maturities.

The 15.01.27, 01.05.27 and 15.09.27 maturities were seen trading at the rates of 8.15%-8.16%, 8.40% and 8.50% respectively. The 01.09.28 maturity was seen trading at the rate of 9.03%. The 15.06.29, 15.09.29, 15.10.29 and 15.12.29 maturities were seen trading at the rates of 9.45%, 9.49%, 9.50% and 9.55% respectively.

In secondary market bills, trades were observed on February 2026 tenors at the rate of 7.95%.

This comes ahead of a round of Treasury Bond auctions, due today 29 July, with a total offered amount of Rs. 122 billion.

The auction will be comprised of two maturities:

Rs. 90 billion from a 1 July 2030 Maturity bearing a coupon rate of 09.75%

Rs. 32 billion from a 1 July 2037 Maturity bearing a coupon rate of 10.75%

The settlement for which will be held on 1 August 2025.

For context, the previous round of Treasury Bond auctions held on 11 July saw a total amount of Rs. 200 billion offered across three maturities. The auction was undersubscribed, raising Rs. 142.24 billion (71.12%) across the 1nd and 2nd phases. This was despite bids received exceeding the offered amount by 1.58 times. Maturity wise the results of the auctions were as follows:

15.10.29 (10.35% coupon): was fully subscribed in the first phase in competitive bidding at a weighted average yield of 9.46%, coming in line with market expectations.

01.06.33 (09.00% coupon): failed to raise the entire maturity-wise offered amount of Rs. 75 billion at the 1st phase, which prompted the opening of the 2nd phase. The 01.06.33 maturity saw only 46.58% or Rs. 34.94 billion raised in successful bids at a weighted average rate of 10.67% across both phases.

15.09.34 maturity: was also undersubscribed at the 1st phase which prompted the opening of the 2nd phase. Across both phases the maturity raised Rs. 32.30 billion (against an offered amount of Rs. 50 billion) in successful bids and was issued at a weighted average of 10.81%.

The total secondary market Treasury Bond/Bill transacted volume for 25 July was Rs. 8.73 billion.

In money markets, the weighted average rates on overnight call money and Repo stood at 7.83% and 7.86% respectively.

The net liquidity surplus was recorded at Rs. 102.87 billion yesterday.

Forex Market

In the Forex market, the USD/LKR rate on spot contracts closed the day broadly steady at Rs. 301.95/302.03 as against Rs. 301.90/302.00 the previous day.

The total USD/LKR traded volume for 25 July was $ 108.91 million. (References: Central Bank of Sri Lanka, Bloomberg E-Bond trading platform, Money broking companies)

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