Secondary bond market rallies

• Rupee appreciates; strong recovery

By WealthTrust Securities

The secondary bond market yesterday started off on a positive note following the conclusion of the Presidential election. Market participants were seen aggressively buying in on local bonds, which saw yields nose-dive on the back of a surge in activity and transaction volumes.

Accordingly, yields on the 2028 tenors, specifically the liquid 15.02.28 and the 01.05.28 maturities dropped to an intraday low of 13.35%, down from an intraday high of 13.65%, driven by strong demand and a notable decline in closing two-way quotes. Similarly, the shorter 2026 tenors, 01.02.26 and 01.06.26, traded lower, ranging from 11.50% to 11.40% and 11.80% to 11.60%, respectively. Additionally, the yield on the 15.06.29 maturity declined from 13.80% to 13.60% intraday.

Trading was concentrated on select maturities, particularly those issued at the last auction on 12 September. Yields were well below the weighted average rates from that auction; for reference, the 15.02.28 was issued at a weighted average of 13.79%, and the 15.06.29 at 13.98%.

The secondary bill market saw the December 2024 (approximately three months) and March 2025 maturities (approximately six months) changing hands at the rates of 10.50% and 10.90% to 10.75%, respectively.

The total secondary market Treasury bond/bill transacted volume for 20 September was Rs. 14.20 billion.

In money markets, the weighted average rates on overnight call money and repo stood at 8.63% and 8.85% respectively. The DOD (Domestic Operations Department) of the Central Bank injected liquidity by way of an overnight repo auction for Rs. 40.00 billion at a weighted average rate of 8.61%.

The net liquidity surplus stood at Rs. 37.69 yesterday. An amount of Rs. 13.26 billion was withdrawn from the Central Bank’s SLFR (Standing Lending Facility Rate) of 9.25% as against an amount of Rs. 90.95 billion deposited at the Central Bank’s SDFR (Standard Deposit Facility Rate) of 8.25%.

Forex market 

In the Forex market, the USD/LKR rate on spot contracts closed the day considerably higher at Rs. 304.25/304.75 against its previous day’s closing level of Rs. 305.25/306.00.

The total USD/LKR traded volume for 20 September was $ 48.85 million. 

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