Secondary bond market yields consolidate ahead of back-to-back auctions

Wednesday, 11 June 2025 00:08 - - {{hitsCtrl.values.hits}}

Rupee appreciates marginally

By Wealth Trust Securities

The secondary bond market kicked off the week with yields trading sideways, fluctuating within a narrow band. As such, the market was seen consolidating ahead of the upcoming back-to-back Treasury Bill and Bond auctions scheduled for this week. Market activity and transaction volumes were at subdued levels as market participants adopted a watchful stance ahead of the upcoming auctions.

Trading was confined to select liquid tenors. Accordingly, the 15.12.26 and 01.05.27 maturities were seen trading at the rates of 8.00% and 8.25%. The 15.02.28 and 01.07.28 maturities traded at the rate of 8.70% and 8.81% respectively. The 15.09.29 and 15.12.29 maturities were seen trading at the rates of 9.45% and 9.47%-9.50% respectively.

This comes ahead of the Treasury bill auction due today. The auction will have on offer a total amount of Rs. 175 billion on offer, an increase of Rs. 7.50 billion over the previous week. This will consist of Rs. 25 billion on the 91-day maturity, Rs 60 billion on the 182-day and Rs. 90 billion on the 364-day maturity.

For reference the weekly Treasury bill auction conducted last Wednesday (4 June) was fully subscribed. The entire Rs. 167.50 billion on offer successfully raised in the 1st phase in competitive bidding. The total bids received exceeded the offered amount by 1.99 times. The weighted average yield rate on the 182-day tenor declined by 4 basis points to 7.77%, and the 364-day tenor also fell by 4 basis points to 7.94%. However, the weighted average yield rate on the 91-day tenor remained steady at 7.55%. An additional amount of Rs. 16.75 billion being the maximum aggregate amount offered was raised at the 2nd phase across all three maturities at the weighted averages determined at the 1st phase.

This will be followed by an Rs. 200 billion Treasury bond auction scheduled to be held on 12 June were announced. The auction will be comprised of:

Rs. 41 billion from a 15 October 2029 Maturity bearing a coupon rate of 10.35%
Rs. 70 billion from a 15 December 2032 Maturity bearing a coupon rate of 11.50%

The settlement for which will be held on 16 June.

The total secondary market Treasury bond/bill transacted volume for 6 June was Rs. 10.62 billion.

In money markets, the weighted average rates on overnight call money and Repo stood at 7.70% and 7.72% respectively.

The net liquidity surplus increased further to Rs. 182.66 billion yesterday. An amount of Rs. 0.28 billion was withdrawn from the Central Bank’s SLFR (Standing Lending Facility Rate) of 8.25%, while an amount of Rs. 182.94 billion was deposited at Central Bank’s SDFR (Standard Deposit Facility Rate) of 7.25%.

Forex Market

In the Forex market, the USD/LKR rate on spot contracts closed the day appreciating to Rs. 299.00/299.10 as against 299.10/299.20 the previous day.

The total USD/LKR traded volume for 6 June was $ 98.95 million.

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

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