Secondary bond market remains active; yields consolidate

• Rs. 167 b Treasury bill auction in focus; rupee steady

By Wealth Trust Securities

The secondary bond market yesterday remained positive as market activity and transaction volumes continued to be at healthy levels. Yields consolidated as sideways trading was observed along most of the yield curve. However, the 15.10.30 maturity continued to see concentrated demand which resulted in yields edge lower.

In secondary bonds market, the 15.05.26 maturity was seen trading at the rates of 8.58%-8.55%. The 01.05.27 maturity was observed trading at the rate of 9.20%. The early 2028 tenor 15.02.28 maturity traded at the rate of 10.00%. The mid/late-2028 tenors of 01.07.28 and 15.10.28 maturities were seen trading within the range of 10.21%-10.19% and 10.35%-10.34% respectively. The 15.09.29 maturity traded within the range of 10.73%-10.72%. The popular 15.10.30 maturity saw considerable interest and traded down the range of 11.02%-11.00%. The 2031 and 2032 maturities traded at the rates of 11.35%-11.39% and 11.42% to 11.47% respectively.

This comes ahead of the Treasury bill auction due today, which will have a total amount of Rs. 140 billion on offer, an increase of Rs. 27 billion over the previous week. This will consist of Rs. 22 billion on the 91-day maturity, Rs 80 billion on the 182-day and Rs. 65 billion on the 364-day maturity.

For reference, at the weekly Treasury bill auction held last Tuesday (25/02/2025), the weighted average yields across all three offered maturities declined for the 12th consecutive week. This marking a continued downward trend, with yields on at least one tenor decreasing over the past 16 weeks. Accordingly, the weighted average rates on the 91-day tenor dropped by 04 basis points to 7.57%, the 182-day tenor by 03 basis points to 7.87% and the 364-day tenor by 01 basis point to 8.31%. Total bids received exceeded the offered amount by 2.04 times, and the entire Rs. 140 billion on offer was successfully raised in the 1st phase in competitive bidding.

The total secondary market Treasury bond/bill transacted volume for 3 March was Rs. 17.23 billion.

In money markets, the weighted average rates on overnight call money and Repo stood at 7.98% and 8.01% respectively.

The net liquidity surplus stood at Rs. 148.99 billion yesterday. Rs. 0.67 billion was withdrawn from the Central Banks SLFR (Standing Lending Facility Rate) of 8.50%, while an amount of Rs. 149.66 billion was deposited at the Central Banks SDFR (Standard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 marginally to 

Rs. 295.18/295.25 as against 

Rs. 295.28/295.30 the previous day.

The total USD/LKR traded volume for 03 March was 

$ 63.05 million.

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