Bond market activity increases; yields dip

•  DOD to buy bonds through outright bond purchase auctions once again
• Rupee steady

By Wealth Trust Securities

The secondary bond market saw yields dip with increased activity yesterday. Interest continued to be centred on the short to medium tenors, particularly on the 2026 durations. This is against the backdrop of the announcement of two auctions by the Domestic Operations Department (DOD) of CBSL for outright purchase of 01.06.2026 and 01.08.2026 maturities today.

The maturities of 01.08.24, 15.01.25, four 26’s of (01.02.26, 15.05.26, 01.06.26 and 01.08.26), 15.09.27, 15.03.28 and 15.05.30 were seen changing hands at levels of 14.00%, 13.50%, 14.03% to 13.80%, 14.18% to 14.10%, 14.17% to 14.10% and 14.20% respectively.

Meanwhile, in secondary market bills, January, March, April and July 2024 maturities were seen trading at 10.50%, 14.15%, 14.10% and 14.05% respectively.

The total secondary market Treasury bond/bill transacted volume for 3 January was Rs. 78.31 billion.

In money markets, the weighted average rates on overnight call money and Repo stood at 9.14% and 9.86% respectively while the net liquidity stood at a deficit 

of Rs. 116.64 billion yesterday.

The DOD (Domestic Operations Department) of Central Bank injected liquidity by way of an overnight Repo auction for Rs. 78.05 billion at a weighted average rate of 9.06% and long-term reverse repo auction for 20.5 billion at 10.71%. An amount of Rs. 38.59 billion was withdrawn from Central Banks SLFR (Standard Lending Facility Rate) of 10.00.

Forex Market 

In the Forex market, the USD/LKR rate on spot contracts closed the day broadly steady at Rs. 322.45/322.60 yesterday against its previous day’s closing level 

of Rs. 322.60.00/322.90.

 The total USD/LKR traded volume for 3 January was $ 47.25 million

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