Secondary bond market yields increase further

Wednesday, 21 May 2025 00:30 - - {{hitsCtrl.values.hits}}

Rs. 157.50 b T. bill auction in focus; Rupee depreciates further

By Wealth Trust Securities

The secondary bond market yesterday saw yields increase further on the back of continued selling pressure as market participants were seen adopting a cautious stance ahead of the upcoming Monetary Policy Review due on 22 May – this Thursday.

Market activity and transaction volumes were seen at healthy levels. Meanwhile, the currency continued to trade on a weaker note, adding to the cautious sentiment in financial markets.

The 15.09.27 maturity was seen trading at the rates of 9.20%-9.21%. The 15.02.28 and 15.03.28 maturity was seen trading at the rates of 9.62% and 9.65% respectively. The 01.07.28 and 15.10.28 maturities were seen trading at the rates of 9.75% and 9.80%. The yield on the 15.06.29 and 15.12.29 maturities were seen increasing to trade at 10.15% and 10.18%-10.20% respectively. The 15.03.31 maturity was seen trading up the range of 10.68%-10.72%. The 01.11.33 maturity was seen trading within the range of 10.95%-10.97%.

This comes ahead of the Treasury bill auction due today, which will have a total amount of Rs. 157.50 billion on offer, a decrease of

Rs. 15.50 billion over the previous week. This will consist of

Rs. 20 billion on the 91-day maturity,

Rs. 50 billion on the 182-day and Rs. 87.50 billion on the 364-day maturity.

For reference, the weekly Treasury bill auction conducted last Wednesday (14 May) was fully subscribed. The entire Rs. 173.00 billion offered was successfully raised at the first phase in competitive bidding. The total bids received exceeded the offered amount by 2.06 times. The auction saw weighted average yield rates remain unchanged from the previous week. Accordingly, the weighted average rates on the 91-day, 182-day and 364-day tenors were recorded at 7.65%, 7.98% and 8.30% respectively.

The total secondary market Treasury bond/bill transacted volume for 19 May was Rs. 15.15 billion.

In money markets, the weighted average rates on overnight call money and Repo stood at 7.97% and 7.98% respectively.

The net liquidity surplus increased to

Rs. 174.11 billion yesterday. Rs. 2 billion was withdrawn from the Central Bank’s SLFR (Standing Lending Facility Rate) of 8.50%, while an amount of

Rs. 176.11 billion was deposited at Central Bank’s SDFR (Standard Deposit Facility Rate) of 7.50%.

Forex market

In the forex market, the USD/LKR rate on spot contracts was seen closing the day depreciating further to

Rs. 300.75/301.10 as against 299.85/300.05 the previous day.

The total USD/LKR traded volume for 19 May was $ 91.35 million.

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

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