Secondary bond market yields continue to climb

Tuesday, 24 June 2025 01:01 - - {{hitsCtrl.values.hits}}

NCPI records positive inflation at 0.6% YoY in May
Rupee depreciates

By Wealth Trust Securities

The secondary bond market opened the week with yields moving up further, as sentiment was soured by further escalation in the prevailing Israel-Iran conflict, mirroring declines in the local stock market as well. The key trigger was news that the United States had bombed Iranian nuclear sites, prompting Iran to vow retaliation. Reports also indicated that the Iranian Parliament was threatening to close the Strait of Hormuz, a critical chokepoint for a significant portion of global oil traffic. Market activity and transaction volumes were at healthy levels as market participants adopted a risk-off approach ahead of the upcoming Treasury bond auction.

This week is scheduled to have a round of Treasury bond auctions with a total offered amount of Rs. 295.00 billion comprised of 4-, 6-, 8- and 12-year tenors as outlined in the “Tentative Treasury bond and Treasury bill Issuance/ Settlement Calendar” published by the Central Bank of Sri Lanka for June-September 2025. It would incidentally be the largest for the year 2025 so far and be tie with the all-time highest offered amount recorded at the auction conducted on 13 June 2024.

In secondary bond markets, the 15.12.26 maturity traded up the range of 8.25%-8.30%. The 15.09.27 maturity was seen trading at the rate of 8.80%. The 15.02.28 and 15.12.28 maturities were seen trading at the rates of 9.00%-9.10% and 9.20% respectively. The 15.06.29, 15.09.29 and 15.12.29 maturities traded up the ranges of 9.65%-9.75%, 9.60%-9.80% and 9.65%-9.80%. The 15.12.32 maturity traded at the rate of 10.65%. The 15.09.34 maturity traded at the rates of 10.68%-10.70%.

On the inflation front, the National Consumer Price Index - NCPI (Base: 2021=100) or National inflation for the month of May 2024 was recorded at + 0.60% on its point to point as against -0.80% recorded in April 2024, while the annual average inflation was recorded at -0.80%. This marked the first instance of positive inflation after 8 consecutive months of deflation.

The total secondary market Treasury bond/bill transacted volume for 20 June was Rs. 12.13 billion.

In money markets, the weighted average rates on overnight call money and Repo stood at 7.72% and 7.75% respectively.

The net liquidity surplus was recorded at Rs. 102.97 billion yesterday. No funds were withdrawn from the Central Banks SLFR (Standing Lending Facility Rate) of 8.25%.

Forex market

In the Forex market, the USD/LKR rate on spot contracts closed the day depreciating to Rs. 301.00/301.30 as against 300.50/300.65 the previous day.

The total USD/LKR traded volume for 20 June was $ 57.80 million.

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

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