Bond market activity increases; yields dip

• DOD to buy bonds through outright bond purchase auctions; Rupee gains further

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, with relatively large volumes transacted. This is against the backdrop of the announcement of three auctions by the Domestic Operations Department (DOD) of CBSL for outright purchase of 15.05.26, 01.06.26 and 01.08.2026 maturities today.

The maturities of the three 25’s (15.01.25, 01.06.25, 01.08.25), two 26’s (01.02.26 and 01.06.26), 15.09.27, two 28’s (15.03.28 and 01.07.28), 15.07.29 and 15.05.30 were seen trading between the ranges of 13.50% to 13.00%, 13.70% to 13.63%, 13.90%, 14.18% to 14.03%, 14.28% to 14.18% and 14.10% respectively.

In secondary market bills April and July 2024 maturities were seen trading at 13.65%, 13.40% respectively.

The total secondary market Treasury bond/bill transacted volume for 17 January was Rs. 59.34 billion.

In money markets, the weighted average rates on overnight call money and Repo stood at 9.10% and 9.37% respectively while the net liquidity stood at a deficit of Rs. 72.92 billion yesterday.

The DOD (Domestic Operations Department) of Central Bank injected liquidity by way of an overnight Repo auction for Rs. 42.50 billion at a weighted average rate of 9.08%. An amount of Rs. 30.77 billion was withdrawn from Central Bank’s SLFR (Standing Lending Facility Rate) of 10.00 while an amount of Rs. 0.35 billion was deposited at the SDFR (Standing Deposit Facility Rate) of 9.00%.

Forex market 

In the forex market, the USD/LKR rate on spot contracts closed the day appreciating further slightly at Rs. 320.70/320.90 yesterday against its previous day’s closing level of Rs. 320.90/321.10.

The total USD/LKR traded volume for 17 January was $ 84.02 million. 

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