Bond market activity moderates; yields hold

• Rs. 40 b bond auctions in spotlight
• Rupee holds ground

By Wealth Trust Securities

The secondary bond market kicked off the week with overall trading activity moderating and yields holding broadly steady ahead of today’s bond auctions. However, concentrated activity was seen on 2026 (of 01.02.26 and 01.08.26) maturities with considerable volumes being transacted within the range of 13.27% to 13.25%. The rest of the yield curve saw limited action with the following selected maturities of 15.01.25, two 27’s (15.01.27 and 01.05.27) and three 28’s (15.03.28, 01.07.28 and 15.12.28) changing hands within the ranges of 12.45%, 13.50% to 13.25% and 13.72% to 13.70% respectively on relatively thin volumes.

The Rs. 40 billion round of Treasury bond auctions due today, will have an offer of Rs. 24 billion from a new maturity on 15 December 2026 with a coupon rate of 11.25%, and Rs. 16 billion from a maturity on 15 December 2028 with a coupon of 11.50%.

For context, the previous round of auctions conducted on 11 January saw the entire offered amount on the 2026 and 2028 durations being fully taken up. The 01.02.2026 maturity recorded a weighted average rate of 13.83% while the 15.03.2028 recorded a weighted average rate of 14.21%. The weighted average on the 15.05.30 maturity was 14.22%, however only 

Rs. 25.98 billion was raised out of an offered amount of Rs. 30 billion. The total bids received exceeded the total offered amount by 2.08 times. However, only Rs. 115.98 billion or 96.65% was accepted in total against a total offered amount of Rs. 120 billion. There was no direct issuance window. 

The total secondary market Treasury bond/bill transacted volume for 26 January was Rs. 6.04 billion.

In money markets, the weighted average rates on overnight call money and Repo stood at 9.11% and 9.89% respectively. The DOD (Domestic Operations Department) of Central Bank injected liquidity by way of an overnight reverse repo auction for Rs. 32.91 billion at the weighted average rates of 9.17%.

The net liquidity deficit stood at Rs. 42.24 billion yesterday as an amount of Rs. 17.32 billion was withdrawn from Central Banks SLFR (Standard Lending Facility Rate) of 10.00% against an amount of Rs. 7.99 billion deposited at Central Banks SDFR (Standard Deposit Facility Rate) of 9.00%. 

Forex Market 

In the Forex market, the USD/LKR rate on spot contracts closed the day broadly steady at 

Rs. 317.75/317.90 against its previous day’s closing level of Rs. 317.50/317.80.

The total USD/LKR traded volume for 26 January was $ 70.87 million.