Secondary bond market remains active; yields edge up

Friday, 16 February 2024 00:20 - - {{hitsCtrl.values.hits}}

By Wealth Trust Securities

The secondary bond market started off on a somewhat subdued note yesterday but changed gears mid-day as activity picked up on the back of some volatility in yields.

A bout of profit taking saw yields move up, which led to a fresh wave of renewed buying interest that curtailed the upward momentum. As such closing two-way quotes were seen edging up slightly, against its opening lows. Trading as usual continued to be predominantly in 2026 and 2028 tenors.

The yield on 2028 tenors (15.03.28, 01.05.28, 01.07.28, and 15.12.28) were seen hitting an intraday high of 12.15% against its opening low of 11.85%, before settling at a closing two-way quote of 11.95%/12.05% (offer/bid). The most sought after 01.08.26 maturity was seen ascending to an intraday high of 11.30% as against its opening low of 10.75%, before closing at 10.95%/11.05%. Additionally, trades were also seen on the maturities of 2025’s (01.06.25 and 01.07.25), 2026’s (01.02.26, 01.06.26), 15.09.27 and 01.07.32 within intraday lows and highs of 10.20% to 10.25%, 10.45% to 10.90%, 11.40% to 11.55% and 12.50% respectively.

In secondary market bills, March/April, August 2024 and February 2025 maturities were seen changing hands at 9.50%, 9.86% to 10.15%. and 10.00% to 10.02% respectively.

The total secondary market Treasury bond/bill transacted volume for 14 February was Rs. 68.46 billion.

In money markets, the weighted average rates on overnight call money and Repo stood at 9.17% and 9.35% respectively while the net liquidity stood at a surplus of Rs. 33.02 billion yesterday.

The DOD (Domestic Operations Department) of Central Bank injected liquidity by way of an overnight reverse repo auction for LKR 30.00 billion at the weighted average rate of 9.45%. An amount of Rs. 21.44 billion was withdrawn from Central Banks SLFR (Standing Lending Facility Rate) of 10.00 while an amount of Rs. 84.46 billion was deposited at the SDFR (Standing Deposit Facility Rate) of 9.00%.

Forex Market

In the Forex market, the USD/LKR rate on spot contracts closed the day appreciating to

Rs. 312.70/312.90 yesterday, against its previous day’s closing level of Rs. 313.00/313.10.

The total USD/LKR traded volume for 14 February was $ 29.68 million.

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