Secondary bond market activity moderates; yields hold broadly steady

• CCPI records deflation in September
• Rupee trades at high of Rs. 296.30

By WealthTrust Securities

The secondary bond market yesterday kicked off the new trading week on a relatively subdued note. Yields held mostly unchanged on the back of moderated activity and transaction volumes.

Accordingly, the 15.12.26 and 01.05.27 maturities changed hands at the rate of 10.75% and 11.53%. The popular liquid 15.02.28 maturity was observed trading at 11.95%. The 2029 tenors, the 15.06.29 and 15.09.29 maturities, were observed trading within the range of 12.00% to 12.05%.

In secondary market bills, December 2024 (approximately three months) were observed trading down the range from 10.25% to 10.10%.

On the inflation front, the Colombo Consumer Price Index (CCPI) (Base: 2021=100) for the month of September 2024 was recorded at -0.50% on a year-on-year basis as against +0.50% recorded in August 2024. This undershot both a Bloomberg forecast of +0.90% and the Central Bank of Sri Lanka’s target of 5.00% (as it has since March). This marks the first instance in 39 years that Sri Lanka has recorded negative inflation (deflation). This was attributable to recent downward revisions to the electricity tariffs, fuel, and LP gas prices, as well as the 

overall decline in food prices.

The total secondary market Treasury bond/bill transacted volume for 27 September was Rs. 32.01 billion.

In money markets, the weighted average rates on overnight call money and repo were 8.65% and 8.79%, 

respectively.

The net liquidity surplus stood at Rs. 88.65 billion yesterday as an amount of Rs. 16.71 billion was withdrawn from the Central Bank’s SLFR (Standard Lending Facility Rate) of 9.25% against an amount of Rs. 144.43 billion deposited at the Central Bank’s SDFR (Standard Deposit Facility Rate) 

of 8.25%. 

The DOD (Domestic Operations Department) of the Central Bank injected liquidity by way of an overnight reverse repo auction for Rs. 39.07 billion at the weighted average rate of 8.59%.

Forex market 

In the Forex market, the USD/LKR on spot contracts traded at a high of Rs. 296.30 yesterday before closing the day at Rs. 296.10/296.60 against its previous day’s closing level of Rs. 298.70/298.90.

The total USD/LKR traded volume for 30 July was $ 107.25 million. 

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