Bearish sentiment keeps bond market at bay

By Wealth Trust Securities

The bearish or dull sentiment witnessed in the secondary bond market during the previous week continued during the week ending 19 August as well with yields fluctuating within a narrow range on the back of thin volumes. This was despite the weekly Treasury bill auction getting fully subscribed once again while the Central Bank of Sri Lanka was seen holding its policy rates steady at 14.50% and 15.50% on its Standing Deposit Facility Rate (SLDR) and Standing Lending Facility Rate (SLFR) respectively.

The limited activity was seen on the liquid 01.06.25 maturity within the range of 27.80% to 28.40% against its previous weeks closing level of 27.50/28.25. In addition, the 01.08.24 and 15.07.29 maturities were seen changing hands at 28.50% and 27.20% respectively as well. In the secondary bill market, bills maturing in February, July and August 2023 traded within the range of 28.75% to 29.25%. 

The foreign holding in rupee bonds recorded a marginal decrease of Rs. 103.49 million for the week ending 17 August while the daily secondary market Treasury bond/bill transacted volumes for the first four trading days of the week averaged Rs. 9.75 billion. 

In money markets, the weighted average rates on call money and repo stood at 15.50% each for the week while the total outstanding liquidity deficit was registered at Rs. 634.38 billion by the end of the week against its previous weeks of Rs. 601.88 billion. The CBSL’s holding of Government Securities decreased further to Rs. 2,230.02 billion against its previous weeks of Rs. 2,260.13 billion.

USD/LKR

In the forex market, the middle rate for USD/LKR spot contracts was seen hovering within the range of Rs. 360.92 to Rs. 361.00 during the week against its previous week of 360.85.

The daily USD/LKR average traded volume for the first four trading days of the week stood at $ 36.55 million. 

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