Secondary bond market rallies ahead of Rs. 115 b Treasury bill auction

Wednesday, 19 February 2025 00:08 - - {{hitsCtrl.values.hits}}

Rupee depreciates

By Wealth Trust Securities

The secondary bond market yesterday rallied on the back of heightened activity and transaction volumes. Aggressive buying was seen on bonds ranging from 2026-2030 which pushed yields considerably lower.

The 15.12.26 maturity saw trades down the range of 8.85%-8.75%. The yield on the 01.05.27 maturity declined intraday from 9.40%-9.30%. The yield on the 15.02.28 and 15.03.28 maturities were seen declining from intraday highs of 10.07% to lows of 10.04% collectively. The yield on the 01.07.28 and 15.10.28 bonds dropped down the ranges of 10.27%-10.20% and 10.37%-10.33%. The yield on the 15.09.29 maturity declined from an intraday high of 10.78%-10.74%. The 15.10.30 maturity saw trades down the range of 11.21%-11.19%.

Meanwhile, in the secondary bill market January-February 2025 bills traded within the range of 8.37%-8.35%.

This comes ahead of the Treasury bill auction due today, which will have a total amount of Rs. 115 billion on offer, a decrease of Rs. 42.50 billion over the previous week. This will consist of Rs. 25 billion on the 91-day maturity, Rs. 60 billion on the 182-day and Rs. 30 billion on the 364-day maturity.

For reference, at the weekly Treasury bill auction held last Tuesday (11/02/2025), the weighted average rates declined across all three offered maturities for the 10th consecutive week at the weekly Treasury bill auction conducted on Tuesday. Accordingly, the weighted average rates on the 91-day tenor dropped by 10 basis points to 7.69%, the 182-day tenor by 6 basis points to 7.94% and the 364-day tenor by 1 basis point to 8.42%. Total bids received exceeded the offered amount by 2.27 times, and the entire Rs. 157.50 billion on offer was successfully raised in the 1st phase in competitive bidding.

The total secondary market Treasury bond/bill transacted volume for 17 February was Rs. 8.12 billion.

In money markets, the weighted average rates on overnight call money and Repo stood at 7.98% and 7.99% respectively.

The net liquidity surplus stood at Rs. 146.71 billion yesterday. Rs. 4.96 billion was withdrawn from the Central Bank’s SLFR (Standing Lending Facility Rate) of 8.50%, while an amount of

Rs. 151.67 billion was deposited at the 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 depreciating to Rs. 296.25/296.75 against its previous day’s closing level of Rs. 295.25/295.50.

The total USD/LKR traded volume for 17 February was

$ 53.35 million.

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

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