Secondary Bond market range-bound

Monday, 21 April 2025 00:02 - - {{hitsCtrl.values.hits}}

T-bill auction undersubscribed for fourth straight week; rates remain broadly steady
Foreign holdings in Rupee treasuries records net outflow for second consecutive week
Rupee depreciates

By Wealth Trust Securities

The secondary bond market for the holiday-shortened week ending 17 April saw yields trade largely range-bound. The sideways momentum resulted in the market entering a consolidation phase, as participants adopted a cautious stance amid the absence of strong directional cues. Market activity and transaction volumes remained at decent levels despite the holiday lull. The majority of the action was centred on the 2028–2029 tenors.

The 15.02.28 and 15.03.28 maturities saw yields trade within the range of 10.05%-9.98%%. The 01.07.28 maturity was seen trading at the rate of 10.15% and the 15.10.28 maturity within the range of 10.27%-10.24%. The 15.09.29 and 15.12.29 maturities traded at the rates of 10.50% and 10.59%-10.56% respectively. The 15.03.31 and 15.12.31 maturities were both seen trading at the rate of 11.15%.

The weekly Treasury Bill auction conducted last Wednesday went undersubscribed at its first phase for a fourth consecutive week, with only 71.32% or Rs. 62.40 billion of the total Rs. 87.50 billion on offer accepted. This was despite total bids received exceeding the offered amount by 2.44 times.

The auction saw weighted average yield rates remain broadly steady. Accordingly, the weighted average rate on the 91-day tenor was recorded unchanged at 7.59% and the 364-day tenor at 8.31%. However, the weighted average rate on the 182-day tenor increased by 05 basis points to 7.96%. 91% or majority of the funds raised at the auction were from the 182-day maturity.

Meanwhile, the foreign holding in Rupee Treasuries recorded a net outflow for the second consecutive week for the week ending 16 April 2025 amounting to Rs. 1.46 billion, and as a result the total holding dropped to Rs. 87.83 billion.

The total outstanding liquidity surplus in the inter-bank money market dropped further to Rs. 57.33 billion as at the week ending 17 April 2025, from Rs. 61.71 billion recorded the previous week. The weighted average interest rates on call money and repo were recorded within the ranges of 7.96% and 7.95%-7.96% respectively.

The Central Bank of Sri Lanka’s (CBSL) holding of Government Securities was registered at Rs. 2,511.92 billion as at 17 April 2025, unchanged from the previous week’s closing level.

Forex Market

In the Forex market, the USD/LKR rate on spot contracts was seen depreciating, to close the week at Rs. 299.00/299.10 as against the previous week’s closing level of Rs. 298.10/298.30 and subsequent to trading at a high of Rs. 298.35 and a low of Rs. 299.30.

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

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