Secondary bond market remains active; yields consolidate

• Rs. 205.00 b T-bond auction sees bullish outcome; fully subscribed
• Rupee appreciates

By WealthTrust Securities

The Rs. 205.00 billion Treasury bond auction conducted yesterday, recorded a resoundingly bullish outcome. A 15.10.28 maturity (bearing an 11.00% coupon) was issued at a weighted average yield of 10.62% and with the entire Rs 80.00 billion offered raised at the first phase of subscription. This maturity was observed quoted at 10.60%/10.70% prior to the auction. 

A 15.03.31 maturity (bearing an 11.25% coupon) was issued at a weighted average yield of 11.28% and with the entire Rs 75.00 billion offered raised at the first phase of subscription. In addition, a 01.11.33 maturity (bearing a 09.00% coupon) was issued at a weighted average rate of 11.40%, also raising the entire Rs 50.00 billion offered at the first phase itself. Prior to the auction, 2031 tenors were observed quoted at the two-way rate of 11.25%/11.35%.

In conclusion, the auction overall saw total bids received exceed the offered amount by 2.37 times (an impressive outcome given the scale of the auction) and the entire Rs 205.00 billion was successfully raised in competitive bidding.

An issuance window for the all three maturities is open until close of business of day prior to settlement date (i.e., 4 p.m. on 29.11.2024) at the Weighted Average Yield Rates (WAYRs) determined for the said ISINs at the auction, up to 10% of the respective amounts offered.

Given below are the details of the auction

The secondary bond market yesterday saw activity remain at elevated levels with sizeable volumes transacted. Yields were seen consolidating at the lower levels established after nose-diving the day prior, following the resumption of monetary easing by the Central Bank of Sri Lanka. Despite, yields holding broadly steady during trading, market two-way quotes were seen dropping day-on-day.

The 15.12.26 maturity was seen changing hands at the rate of 9.55%. The 15.12.27 maturity was seen trading within the ranges of 10.32%-10.25%. The yield on the popular and liquid 15.02.28 and 15.03.28 maturities were seen within the range of 10.42% to 10.40%. The 15.10.28 auction bond was seen trading at a low of 10.50%, well below its weighted average of 10.62%. The 15.06.29 and 15.09.29 maturities traded at the rates of 10.80% and 10.92%-10.75% respectively. Additionally, the medium tenor 15.05.30 maturity traded within the ranges of 11.03%-10.98%.

The total secondary market Treasury bond/bill transacted volume for 27 November was Rs. 80.29 billion. In money markets, the weighted average rates on overnight call money and Repo stood at 8.20% and 8.28% respectively. The DOD (Domestic Operations Department) of Central Bank injected liquidity by way of an overnight repo auction for Rs. 22.50 billion at a weighted average rate of 8.12%.

The net liquidity surplus stood at Rs. 192.06 billion yesterday. No funds were withdrawn from the Central Banks SLFR (Standing Lending Facility Rate) of 8.50%, while an amount of Rs. 192.06 billion was deposited at Central Banks 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 to Rs. 290.70/290.80 as against 291.00/291.10 the previous day.

The total USD/LKR traded volume for 27 November was $ 129.32 million.

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