Secondary Bond market continues to rally

Thursday, 20 February 2025 02:05 - - {{hitsCtrl.values.hits}}

T-bill rates continue to tumble
Rupee depreciates

By Wealth Trust Securities

At the weekly Treasury bill auction conducted yesterday the weighted average yields across all three offered maturities declined for the 11th consecutive week. This marks a continued downward trend, with yields on at least one tenor decreasing over the past 15 weeks. Accordingly, the weighted average rates on the 91-day tenor dropped by 08 basis points to 7.61%, the 182-day tenor by 04 basis points to 7.90% and the 364-day tenor by 06 basis point to 8.36%.

Total bids received exceeded the offered amount by 2.38 times, and the entire Rs. 115 billion on offer was successfully raised in the 1st phase in competitive bidding.

The 2nd phase of subscription for the auction will be opened on all three tenors at the weighted average rates until close of business of the day prior to settlement (i.e., 3.00 pm on 20.02.2024). Given below are the details of the auction;

Meanwhile, the secondary bond market yesterday continued to rally on the back of elevated activity and transaction volumes. Strong demand was observed on bonds with tenors ranging from 2026-2030. Aggressive buying was seen pushing yields lower mainly on the early trading hours, even as the Treasury bill auction was underway. Despite some minor profit taking pressure at the tail end of the day on thin volumes following the release of the Treasury bill auction results, two-way quotes were seen closing the day down further. The 01.02.26 maturity was seen trading at the rate of 8.35%. The 01.05.27 maturity was seen trading at a low of 9.25% while the yield on the 15.09.27 maturity was seen declining from an intraday high of 9.55% to a low of 9.45%. The 15.02.28 and 15.03.28 maturities were seen trading down the range of 10.03%-9.99% collectively. The 01.05.28 and 15.10.28 maturities were seen trading down the ranges of 10.15%-10.07% and 10.33%-10.30% respectively. The 15.09.29 maturity was seen trading at the rate of 10.75%. The yield on the 15.10.30 maturity was seen declining down from an intraday high of 11.20% to an intraday low of 11.15%.

The total secondary market Treasury bond/bill transacted volume for 18 February was Rs. 28.61 billion.

In money markets, the weighted average rates on overnight call money and Repo stood at 7.99% and 7.99% respectively.

The net liquidity surplus stood at Rs. 164.76 billion on Tuesday. Rs. 2.67 billion was withdrawn from the Central Banks SLFR (Standing Lending Facility Rate) of 8.50%, while an amount of Rs. 167.43 billion was deposited at the Central Banks SDFR (Standard Deposit Facility Rate) of 7.50%.

Forex Market

In the Forex market, the USD/LKR rate on spot contracts closed the day depreciating to Rs. 297.15/297.65 as against its previous day’s closing level of Rs. 296.25/296.75.

The total USD/LKR traded volume for 18 February was

$ 37.75 million

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

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