Bond market ends the week on a negative note

By Wealth Trust Securities

The positive momentum which was evident in the secondary bond market during the first four trading days of the week ending 5 August 2022 was seen reversing on Friday due to various uncertainties creeping into the market. 

The positive momentum was driven by the outcome of the weekly Treasury bill auction which saw its weighted averages decrease for a third consecutive week which in turn led to buying on the 01.06.2025 bond maturity mainly, as its yield decreased to a weekly low of 27.65% against its previous weeks closing of 27.75/00.

The weekly Treasury bill auction saw weighted averages decrease by 114, 27 and 34 basis points on the 91 day, 182 day and 364 day maturities respectively to 27.72%, 28.97% and 29.19%. The total offered amount of Rs. 87.5 billion was successfully accepted at the auction while a further Rs. 20.35 billion was taken up on the 182 day and 364 day maturities at its phase II option.

Nevertheless, the uncertainties that crept into the market on Friday saw yields increasing once again with the liquid maturity of 01.06.25 hitting an intraweek high of 28.10%. The two-way quotes along the rest of the yield curve were seen increasing and winding as well.

The foreign holding in rupee bonds increased further during the week ending 3 August by Rs. 0.48 billion to Rs. 4.21 billion whereas the daily secondary market Treasury bond/bill transacted volumes for the first two trading days of the week averaged Rs. 4.97 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 was registered at Rs. 607.61 billion by the end of the week against its previous weeks of Rs. 595.39 billion. The CBSL’s holding of Gov. Security’s was registered at Rs. 2,263.04 billion against its previous weeks of Rs. 2,261.36 billion.

Forex market

In the Forex market, the middle rate for USD/LKR spot contracts closed the week at Rs. 360.80, subsequent to moving within the range of Rs. 361.00 to Rs. 360.80 during the week.

The daily USD/LKR average traded volume for the first four trading days of the week stood at $ 58.66 million.  

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