Mixed outcome at Treasury bond auctions

• Bond market activity picks up

By Wealth Trust Securities

The Treasury bond auctions conducted yesterday witnessed a mixed outcome as the 01.05.2027 maturity weighted average came in at 29.21%, in line with its pre-auction rate of 28.75/25 while the 01.07.2025 weighted average came in at 32.19%, significantly higher that a pre-auction rate of 30.50/25. 

The offered amount of Rs. 55 billion on the 01.05.2027 maturity was fully taken up at its first phase of the auction, opening up a further 20% through its direct issuance window until close of business of the day prior to settlement (i.e., 4 p.m. on 31.01.2023). However, only Rs. 12.90 billion was taken from the 01.07.2025 maturity against its offered amount of Rs. 15 billion. 

The secondary bond market activity picked up marginally following the bond auction outcomes. Buying interest on the 01.07.25 maturity saw its yield decrease to an intraday low of 32.30% from a high of 32.75%. 

The total secondary market Treasury bond/bill transacted volume for 27 January was Rs. 4.51 billion.   

In money markets, the weighted average rates on overnight call money and REPO stood at 15.49% and 15.50% respectively while an amount of Rs.120.50 billion was withdrawn from Central Banks SLFR facility (Standard Lending Facility Rate) of 15.50%. The net liquidity deficit was registered at Rs. 49.52 billion yesterday as an amount of Rs. 91.48 billion was deposited at Central Banks SDFR (Standard Deposit Facility Rate) of 14.50%.

The DOD (Domestic Operations Department) of Central Bank injected liquidity by way of a four-day reverse repo auction for a volume of Rs. 20.5 billion at a weighted average rate of 15.00%.

Forex market 

In the forex market, the middle rate for USD/LKR spot contracts remained steady at Rs. 362.14 yesterday.

The total USD/LKR traded volume for 27 January was $ 31.00 million.  

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