Rs. 210 b Treasury Bond auction fully subscribed; outcome bullish

Friday, 14 March 2025 00:18 - - {{hitsCtrl.values.hits}}

Secondary Bond market yields drop
Rupee appreciates marginally

By Wealth Trust Securities

The round of Treasury Bond auctions conducted on Wednesday successfully raised the entire Rs. 210 billion at the 1st phase in competitive bidding. This was an impressive outcome as the auction was incidentally the largest for the year 2025 so far. The total bids received exceeded the offered amount by a staggering 2.29 times.

In particular, the 15.12.29 maturity (11.75% coupon) recorded a bullish outcome and was issued at a weighted average yield of 10.72%. This was below market expectations as the 15.12.29 maturity was seen quoted at the two-way rate of 10.70%/10.75% and traded at 10.74% prior to the auction. Maturity-wise the entire Rs. 85 billion offered was snapped up at the 1st phase of subscription in competitive bidding.

The medium tenor 15.12.32 maturity (11% coupon) was issued at the weighted average rate of 11.40%. This was broadly in line with market expectations as the same maturity was issued at the weighted average yield of 11.41% at the previous round of auctions. The maturity also raised the entire Rs. 75 billion on offer at the 1st phase.

The medium tenor 15.09.34 maturity (10.25% coupon) was issued at the weighted average rate of 11.50%. This was an impressive outcome considering that there was only a 10-basis point term spread over the 2032 tenor. The maturity also raised the entire Rs. 50 billion on offer at the 1st phase.

An issuance window for all three maturities will be open until close of business of the day prior to settlement date (i.e., 3 p.m. on 14.03.2025) at their respective Weighted Average Yield Rates (WAYR), up to 10% of the amount offered.

Meanwhile, the Secondary Bond market on Wednesday rallied. Aggressive buying interest saw yields pushing lower. Trading activity and transaction volumes were seen at robust levels. Strong demand was seen even as the Treasury Bond auction was ongoing. Following the release of the auction results, the market gained further traction, extending its rally further.

The yield on the 15.05.26 maturity traded within the range of 8.64%-8.60%. The yield on the 01.07.28 and 15.10.28 were seen declining down from intraday highs to lows of 10.20%-10.16% and 10.35%-10.27% respectively. The 15.09.29 maturity saw its yield decline down the range of 10.72%-10.65% and the 15.10.30 was seen trading lower at the rate of 10.90%.

The total secondary market Treasury Bond/Bill transacted volume for 11 March was Rs. 39.91 billion.

In money markets, the weighted average rates on overnight call money and Repo stood at 7.97% and 7.96% respectively. The net liquidity surplus stood at Rs. 189.50 billion yesterday.

Forex Market

In the Forex market, the USD/LKR rate on spot contracts closed the day appreciating marginally to Rs. 295.40/295.50 as against 295.45/295.55 the previous day.

The total USD/LKR traded volume for 11 March was $ 62.70 million.

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

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