Thursday Apr 03, 2025
Thursday Apr 03, 2025
Wednesday, 19 March 2025 00:00 - - {{hitsCtrl.values.hits}}
By Wealth Trust Securities
The secondary bond market yesterday continued to rally with strong demand driving down yields to touch fresh lows. Market activity and transaction volumes were seen at elevated levels as aggressive buying interest was seen concentrated on tenors 2028 and beyond.
The short end of the yield curve held broadly steady, bucking the trend, having already adjusted downwards earlier prior to this run. As such, the 15.12.26 and 15.09.27 maturity was seen trading at the rates of 8.70% and 9.40%-9.35% respectively.
However, 2028 tenors and beyond rallied hard, with yields declining steeply as some maturities registered intraday declines in the neighbourhood of 40 basis points.
Accordingly, the yield on the 15.02.28, 01.07.28 and 15.10.28 maturities were seen trading down from intraday highs to lows of 9.83%-9.75%, 9.92%-9.85% and 10.01%-9.92% respectively. Similarly, the yield on the 15.06.29 and 15.09.29 maturities dropped from intraday highs to lows of 10.36%-10.10% and 10.47%-10.12% respectively. The 15.05.30 and 15.10.30 maturities saw rates trade down the ranges of 10.35%-10.25% and 10.65%-10.25% respectively. The 01.12.31 and 15.12.32 maturities were seen trading down the ranges of 10.80%-10.60% and 11.07%-10.90% respectively.
Meanwhile, it was announced that Sri Lanka’s economy recorded a 5.4% year-on-year GDP growth in the fourth and final quarter of 2024. This beat a 5.3% expansion predicted by economists in a Bloomberg survey. This growth occurred in a low-inflation environment, with the annual average (12 month moving average) CCPI inflation rate standing at -1.70% as of December 2024.
This comes ahead of the Treasury bill auction due today, which will have a total amount of Rs. 143 billion on offer, a decrease of Rs. 22.50 billion over the previous week. This will consist of Rs. 25 billion on the 91-day maturity, Rs. 50 billion on the 182-day and Rs. 68 billion on the 364-day maturity.
For reference, at the weekly Treasury bill auction held last Tuesday (11/03/2025), yields stabilised, ending a thirteen-week streak of consecutive declines across all three offered maturities prior. The weighted average rate only on the 91-day tenor edged down marginally by 1 basis point to 7.52%, while the 182-day and 364-day tenors remained unchanged at 7.86% and 8.34%, respectively. Total bids received exceeded the offered amount by 1.99 times, and the entire Rs. 165.50 billion on offer was successfully raised in the 1st phase in competitive bidding.
The total secondary market Treasury bond/bill transacted volume for 17 March was Rs. 32.40 billion.
In the money market, the net liquidity surplus stood at Rs. 194.16 billion yesterday. Rs. 0.06 billion was withdrawn from the Central Bank’s SLFR (Standing Lending Facility Rate) of 8.50%, while an amount of Rs. 194.21 billion was deposited at Central Banks SDFR (Standard Deposit Facility Rate) of 7.50%.
The weighted average rates on call money and repo were registered at 7.96% and 7.98% respectively.
Forex market
In the Forex market, the USD/LKR rate on spot contracts closed the day appreciating slightly to
Rs. 296.05/296.15 as against
Rs. 296.30/296.45 the previous day.
The total USD/LKR traded volume for 17 March was
$ 87.70 million.
(References: Central Bank of Sri Lanka, Bloomberg E-Bond trading platform, Money broking companies)
