Secondary Bond market yields recover on renewed buying interest

Friday, 11 April 2025 06:48 - - {{hitsCtrl.values.hits}}

Rs 100 b Treasury Bond auction fully subscribed
Rupee recovers

By WealthTrust Securities

The round of Treasury Bond auctions conducted yesterday successfully raised the entire Rs. 100 billion at the first phase in competitive bidding. This was an impressive outcome given that yields in the Secondary market were seen increasing in the days leading up to the auction. The notable recovery in sentiment was against the backdrop that the US has announced it would be pausing the imposition of reciprocal tariffs for a period of 90 days on most nations. The bullish outcome at the auction mirrored the performance in both the local and global stock markets which saw markets rally. The total bids received exceeded the offered amount by a healthy 2.75 times.

In particular, the 15.12.29 maturity (11.75% coupon) recorded a notable outcome and was issued at a weighted average yield of 10.64%. This was subsequent to hitting a high of 11.00% earlier in the week. However, in the hours leading up to the auction, the market recovered strongly on the back of renewed buying interest to quote at 10.55%/10.60%. Maturity-wise the entire Rs. 85 billion offered was snapped up at the first phase of subscription in competitive bidding.

The medium tenor 15.09.34 maturity (10.25% coupon) was issued at the weighted average rate of 11.21%. The maturity also raised the entire Rs. 25 billion on offer at the first phase.

An issuance window for both maturities will be open until close of business of the day prior to settlement date (i.e., 3 p.m. on 11.03.2025) at their respective Weighted Average Yield Rates (WAYR), up to 10% of the amount offered.

Meanwhile, the Secondary Bond market yesterday rallied as well. Aggressive buying interest saw yields pushed 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 15.09.27 maturity was seen trading down from 9.75% to a low of 9.65%. The 15.02.28 and 15.03.28 maturities were seen trading down the range of 10.07%-10.00% collectively. The 15.10.28 and 15.12.28 maturities were seen trading down the ranges of 10.35%-10.18% and 10.37%-10.33% respectively. The 15.09.29 and 15.12.29 maturities were seen trading within the ranges of 10.70%-10.55% collectively.

The total Secondary market Treasury Bond/Bill transacted volume for 9 April was Rs. 20.52 billion.

In money markets, the weighted average rates on overnight call money and Repo stood at 7.95% and 7.95% respectively.

The net liquidity surplus stood at Rs. 135.21 billion yesterday. Rs. 0.04 billion was withdrawn from the Central Bank’s SLFR (Standing Lending Facility Rate) of 8.50%, while an amount of Rs. 135.25 billion was deposited at Central Bank’s SDFR (Standard Deposit Facility Rate) of 7.50%.

Forex market

In the Forex market, the USD/LKR rate on spot contracts closed the day appreciating marginally to Rs. 298.50/299.50 as against 301.00/302.00 the

previous day.

The total USD/LKR traded volume for 9 April was

$ 165.78 million.

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