Secondary Bond market yields steady ahead of Monetary Policy announcement 

• Rs. 157.50 b T-Bill auction fully subscribed; longer tenor yields dip

By WealthTrust Securities

The weekly Treasury Bill auction conducted yesterday was fully subscribed. The entire Rs. 157.50 billion on offer was successfully raised in the first phase in competitive bidding. The total bids received exceeded the offered amount by 2.40 times.

The auction saw weighted average yield rates decline marginally on the longer tenors. Accordingly, the rates on the 182-day and 364-day maturities dropped by 1 basis point each to 7.97% and 8.29% respectively. However, the 91-day maturity saw rates remain unchanged at 7.65%.

The Phase II subscription for all three tenors was opened until 4:15 p.m. yesterday at the WAYRs determined for the said ISINs at the auction in view of the Monetary Policy 

announcement due today. The Phase II was fully subscribed: 10% of total offered amount at Phase 1 or Rs 15.75 billion was raised being the maximum offered.

This comes ahead of the announcement of the Monetary Policy 

announcement for Third Monetary Policy Review for 2025 due today (22 May) at 7:30 a.m.

For context, at the previous monetary policy announcement: the Second Monetary Policy Review for 2025, held on 26 March, the Central Bank of Sri Lanka (CBSL) opted to keep all key policy rates unchanged for the second consecutive review.

Accordingly:

The Overnight Policy Rate (OPR) was maintained at 8.00%.

The Standing Deposit Facility Rate (SDFR) and Standing Lending Facility Rate (SLFR), which are set at ±50 basis points around the OPR, remained at 7.50% and 8.50%, respectively.

The Statutory Reserve Ratio (SRR) was also held steady at 2.00%.

 In its official statement, the CBSL noted:

“The Board arrived at this decision after carefully considering developments both domestically and globally. The Board remains confident that the prevailing monetary policy stance will ensure that inflation moves towards the 5% target while supporting the growth of the domestic economy.”

Meanwhile, the Secondary Bond market yesterday saw yields consolidate and trade broadly steady. Market activity and transaction volumes were seen at subdued levels as market participants adopted a watchful stance ahead of the upcoming Monetary Policy Announcement.

The 15.01.27 maturity was seen trading at the rate of 8.75%. The 15.03.28, 01.05.28 and 15.10.28 maturities were seen trading at the rates of 9.67%, 9.75% and 9.83% respectively. The 15.03.31 and 01.11.33 maturities were seen trading at levels of 10.68% to 10.70% and 10.97% respectively. However, in the early hours of the day yesterday, volume trades were observed on August 2025, March 2026 maturities at the rates of 7.65%-7.70% and 8.25% respectively. Shorter tenor bills were also observed trading, with June and July 2025 maturities trading at the rates of 7.90% and 8.00% respectively.

In money markets, the weighted average rates on overnight call money and Repo stood at 7.98% and 7.98% respectively.

The net liquidity surplus stood at Rs. 163.15 billion yesterday. Rs 14.16 billion was withdrawn from the Central Bank’s SLFR (Standing Lending Facility Rate) of 8.50%, while an amount of Rs. 177.30 billion was deposited at Central Banks SDFR (Standard Deposit Facility Rate) of 7.50%.

Forex market 

In the Forex market, the USD/LKR rate on spot contracts closed the day appreciating to Rs. 299.60/299.65 as against its previous day’s closing level of Rs. 300.75/301.10. 

The total USD/LKR traded volume for 20 May 2025 was 

$ 84.45 million. 

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