Secondary Bond market yields steady to lower; activity healthy

• 182-day and 364-day Bill averages steady for fourth straight week
• Rs. 100 b Bond auction in the spotlight

The secondary Bond market yesterday traded steady to lower on selected tenors. Activity and transaction volumes were seen at healthy levels.

In terms of the trade summary, the 15.01.28 maturity traded at the rate of 10.55%. The 15.10.30 maturity traded at the rate of 11.63%. The 15.12.32 traded at 12.10% and the 01.11.33 at the rates of 12.35 to 12.36%. On the 2034 tenors, the 15.09.34 and 15.10.34 traded at the rate of 12.55%.

At the weekly Treasury Bill auction conducted yesterday, weighted average yields were seen holding steady with the rate on the 182-day and 364-day tenors remaining unchanged at 9.44% and 9.95% respectively for the fourth straight week. However, the 91-day tenor maturity saw its yield edge up marginally by 02 basis points to 9.34%.

The Public Debt Management Office (PDMO) raised only Rs. 86.48 billion or 86.48% in total out of the Rs. 100.00 billion offered in total. The 91-day tenor recorded acceptance above its respective target allocation, while the 182-day and 364-day recorded acceptances below their respective offered amounts.

Total bids received amounted to 2.25 times the overall offer.

The Phase II subscription only on the 182-day and 364-day tenors is now open until 3:00 p.m. today (29) at the Weighted Average Yield Rates (WAYRs) determined at the auction. 

This comes ahead of the Treasury Bond auction due to be held today (29). The round of auctions will have a total offered amount of Rs. 100 billion across three available maturities.

The auction will be comprised of: Rs. 40 billion from a 15 May 2030 Maturity bearing a coupon rate of 11%, Rs. 40 billion from a 15 October 2034 Maturity bearing a coupon rate of 11.70%, and Rs. 20 billion from a 15 August 2036 Maturity bearing a coupon rate of 10.85%. The settlement for which will be held on 2 November 2026.

To recap: the previous Treasury Bond auctions conducted on 13 October raised Rs. 80.69 billion, or 80.69% of the total Rs. 100 billion offered across both phases. The auction recorded a mixed outcome, with weighted average yields settling broadly in line with or marginally above prevailing secondary market levels. The bids received-to-offered ratio stood at 2.89 times.

Maturity-wise, the results were as follows: The 15.09.2029 maturity was issued at a weighted average yield of 11%, with the full offered amount raised in the first phase; the 01.12.2031 maturity was issued at a weighted average yield of 11.67%, with the full offered amount raised in the first phase; the longer-tenor 15.08.2036 maturity was issued at a weighted average yield of 12.33%, but failed to raise the full offered amount across both phases.

Following the auction, a further Rs. 5 billion, the maximum amount offered was raised through the Direct Issuance Window at the weighted average yields determined at the auction. This brought the total value of Treasury Bonds issued during the week to Rs. 85.69 billion.

In the money market, the net liquidity surplus stood at Rs. 118.55 billion yesterday. A total of Rs. 84.15 billion was deposited at the Central Bank’s SDFR (Standing Deposit Facility Rate) of 8.25%, while an amount of Rs. 5.60 billion was withdrawn from the Central Bank’s SLFR (Standing Lending Facility Rate) of 9.25%.

In addition, the Domestic Operations Department (DOD) of the Central Bank of Sri Lanka mopped out Rs. 40.00 billion by way of an overnight repo auction at a weighted average yield of 8.75%.

The weighted average yields on overnight call money and repos were recorded at 9.02% and 9.08% respectively.

Forex market 

The USD/LKR rate on spot contracts was seen closing yesterday broadly steady at Rs. 332.50/332.60. The total USD/LKR traded volume for 27 October amounted to $ 53.30 million.

(References: Public Debt Management Office - Ministry of Finance, Central Bank of Sri Lanka, Bloomberg E-Bond Trading Platform, Money Broking Companies)