Overall secondary bond market activity remains moderate; yields edge down on shorter tenors

By Wealth Trust Securities 

The secondary bond market yesterday saw sporadic bouts of concentrated buying interest, that led to yields edging down on particular short tenor maturities. However, yields on the medium to long end of the yield curve remained mostly unchanged. While overall activity and transaction volumes remained subdued with limited trades observed on selected maturities. Trades were seen primarily on the shorter tenor bonds, with a particular emphasis on 2026 to 2028 durations.

The yield on the liquid 2026 tenor of 15.12.26 was seen dropping to a fresh intraday low of 10.57% from an intraday high of 10.58%. Similarly, the liquid 2027 tenors of 01.05.27 and 15.09.27 were seen declining to intraday lows of 10.90% from an intraday high of 11.00% on the back of notable demand and robust volumes. Meanwhile, the popular 15.03.28 and 01.05.28 tenor was also seen hitting fresh lows of 11.35% and 11.40% respectively. This interest was also reflected on the other 2028 tenors of 01.07.28 and 15.12.28 which changed hands within the range of 11.65% to 11.50%. However, yields held steady on the medium tenor 15.05.30 maturity which changed hands at the rate of 12.10%.

The total secondary market Treasury bond/bill transacted volume for 8 May was Rs. 94.04 billion.

In money markets, the weighted average rates on overnight call money and Repo stood at 8.64% and 8.96% respectively. The DOD (Domestic Operations Department) of Central Bank abstained from injecting liquidity by way of overnight or term reverse repo auctions.

The net liquidity surplus stood at Rs. 171.05 yesterday. An amount of Rs. 1.28 billion was withdrawn from the Central Bank’s SLFR (Standing Lending Facility Rate) of 9.50% as against Rs. 172.33 billion been deposited at Central Bank’s SDFR (Standard Deposit Facility Rate) of 8.50%. 

Forex market 

In the forex market, the USD/LKR rate on spot contracts closed the day mostly unchanged at Rs. 298.65/298.80 against its previous day’s closing level of Rs. 298.75/298.85.

The total USD/LKR traded volume for 8 May was 

$ 42.50 million. 

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

broking companies)