Secondary Bond yields edge up further

By Wealth Trust Securities

The secondary Bond market yesterday saw yields registering an increase for a second consecutive session, as ongoing Middle Eastern tensions and elevated crude oil prices continued to weigh on sentiment. 

Market activity was somewhat subdued as participants overall largely adopted a wait-and-see approach amid the prevailing uncertainty. However, transaction volumes were seen at healthy levels due the execution of several block trades on the back of selling pressure during sporadic bouts of activity. 

The 01.08.26 maturity traded at the rate of 8.32%. The 01.05.28 and 01.07.28 maturities were seen trading at the rates of 9.75% and 9.80% respectively. The 15.10.28 maturity traded at the rate of 9.85%. The 15.06.29 maturity traded up the range of 10%-10.07% and the 15.12.29 maturity at the rate of 10.10%. The 15.05.30 and 01.07.30 maturities were seen trading at the rates of 10.23% and 10.20%-10.22% respectively. The 15.03.31 maturity traded within the range of 10.26% to 10.27% while the 15.12.32 maturity traded at the rate of 10.80%. The 01.06.33 maturity changed hands at the rate of 11%-11.08%, while the 15.06.34 and 15.09.34 maturities changed hands at levels of 11.25% and 11.28%-11.29% respectively. 

The Treasury Bill auction scheduled for today (6), will have a total amount of Rs. 100 billion on offer. This will comprise of Rs. 45 billion offered on the 91-day maturity, Rs. 25 billion on the 182-day maturity and Rs. 30 billion on the 364-day maturity. This is below the maturity in line with the scheduled auction, which is estimated to be approximately Rs. 126 billion.

For reference at the weekly Treasury Bill auction conducted last Wednesday: the shorter tenor 91-day bill attracted strong demand and was issued at a weighted average yield of 8.20%, reflecting a decline of seven basis points compared to the previous week. This marked the first instance in seven weeks where the rate on at least one tenor recorded a decrease. This came despite the 91-day tenor raising above its respective offered amount.

Meanwhile, the 182-day bill increased marginally by two basis points to 8.25%, while the 364-day bill remained unchanged at 8.52%, with both tenors raising below their respective offered amounts. The auction was undersubscribed, raising Rs. 126.90 billion or 90.64% out of the Rs. 140 billion offered at the first phase. The bid-to-cover ratio is 2.18 times. Further to the T-Bill auction held on 29 April 2026, Rs. 10.04 billion was raised at phase II and as a result the aggregate accepted amount of the issuance was Rs. 136.94 billion.

In the money market, the net liquidity surplus increased further to Rs. 246.30 billion yesterday. An amount of Rs. 196.30 billion was deposited at Central Banks SDFR (Standing Deposit Facility Rate) of 7.25%. In addition, the Domestic Operations Department (DOD) of the Central Bank of Sri Lanka drained out an amount of Rs. 50 billion by way of overnight repo auction at a weighted average rate of 7.70%.

The total secondary market Treasury Bond/Bill transacted volume for 4 May was Rs. 6.79 billion. 

Forex market 

The USD/LKR rate on spot contracts was seen closing the day at Rs. 319.90/320.40 as against the previous day’s spot closing level of Rs. 319.60/320.

The total USD/LKR traded volume for 4 May was $ 55.30 million. 

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