Secondary bond market yields hold steady

Wednesday, 7 May 2025 00:02 - - {{hitsCtrl.values.hits}}

Rs. 130 b T-bill auction in focus
Rs. 80 b T-bond auction details announced
Rupee depreciates

By Wealth Trust Securities

The secondary bond market was in a lull state against the backdrop of the Local Government elections. Market activity and transaction volumes were at subdued levels with the market being at a virtual standstill for much of the day.

Sparse trades were seen on selected maturities with yields being largely range-bound and trading broadly steady compared to the previous day’s closings.

The 01.05.27 and 15.09.27 maturities were seen trading at the rates of 9.20% and 9.33% respectively. The 15.12.29 maturity was seen trading within the range of 10.26%-10.30%. The 15.03.31 maturity traded within the ranges of 10.72%-10.75%.

This comes ahead of the Treasury bill auction due today, which will have a total amount of Rs. 130 billion on offer, a decrease of Rs. 15 billion over the previous week. This will consist of Rs. 20 billion on the 91-day maturity, Rs. 60 billion on the 182-day and Rs. 50 billion on the 364-day maturity.

For reference, the weekly Treasury bill auction conducted last Tuesday (29 April) saw the entire Rs. 145 billion offered successfully raised at the 1st phase, in competitive bidding. This marks the first instance in 6 straight weeks where a Treasury bill auction was fully subscribed at the 1st phase. Total bids received exceeded the offered amount by 1.86 times. The auction saw weighted average yield rates exhibit mixed results. Accordingly, the weighted average rates on the 91-day tenor increased by 03 basis points to 7.65% and the 364-day tenor rose by 01 basis points to 8.30%. However, the weighted average rate on the 182-day tenor declined by 01 basis points to 7.97% Maturity-wise the 91-day tenor went undersubscribed. The shortfall was bridged by the 182-day and 364-day tenors which raised more than respective offered amounts. As a result, 92%+ of the total amount raised was attributed to the longer tenor maturities.

In addition, the details of the upcoming Rs. 80 billion Treasury bond auction scheduled to be held on the 09 May 2025 were announced. The auction will be comprised of:

n Rs. 35 billion from a 15 October 2029 Maturity bearing a coupon rate of 10.35%

n Rs. 45 billion from a 1 November 2032 Maturity bearing a coupon rate of 09.00%

The settlement for which will be held on 15 May 2025.

The total secondary market Treasury bond/bill transacted volume for 5 May was Rs. 17.58 billion.

In money markets, the weighted average rates on overnight call money and Repo stood at 7.98% and 7.99% respectively.

The net liquidity surplus stood at Rs. 157.29 billion yesterday. Rs. 0.03 billion was withdrawn from the Central Banks SLFR (Standing Lending Facility Rate) of 8.50%, while an amount of Rs. 157.32 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 were seen closing the day at Rs. 299.50/299.75 as against 299.48/299.50 the previous day.

The total USD/LKR traded volume for 5 May was $ 48.50 million.

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

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