Bond market activity remains moderate; yields edge up further

• Rupee gains marginally 

By Wealth Trust Securities

The secondary bond market initially saw some renewed buying interest yesterday, which drove yields down, particularly on the 2027 tenors. However, selling pressure at the tail end of the day drove yields back up to close the day higher. Activity and transaction volumes continued to be moderate.

The 15.10.27 maturity saw yields decline from 11.95% to 11.75%. However, yields were seen increasing on the rest of the yield curve. Accordingly, the 01.08.26 maturity was seen trading at 10.52%. 

The 2028 tenor of 15.02.28 and 15.03.28 maturities saw yields increase from 12.10% to 12.15%. The 15.09.29 maturity was also seen changing hands at the elevated level of 12.30%. The medium tenor 15.10.30 maturity was seen trading within the range of 12.75% to 12.7625%.

Meanwhile, secondary market T-bills continued to see interest. December 2024 and July 2025 maturities were seen transacting at the rate of 9.23% and 9.95% respectively.

The total secondary market Treasury bond/bill transacted volume for 31 July was Rs. 92.38 billion. In money markets, the weighted average rate on overnight call money was at 8.56% and repo was at 8.74%.

The net liquidity surplus stood at Rs. 72.48 billion yesterday as an amount of Rs. 102.21 billion was deposited at Central Banks SDFR (Standard Deposit Facility Rate) of 8.25% vs an amount of Rs. 0.14 billion been withdrawn from the Central Banks SLFR (Standing Lending Facility Rate) of 9.25%.  Further, the DOD (Domestic Operations Department) of Central Bank injected liquidity by way of an overnight reverse repo auction for Rs. 29.59 billion at a weighted average rate of 8.46%.

Forex Market 

In the Forex market, the USD/LKR rate on spot contracts closed the day marginally up at Rs. 302.20/302.30 against its previous day’s closing level of Rs. 302.48/302.55.

The total USD/LKR traded volume for 31 July was $ 33.65 million.

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