Secondary bond market remains bullish; rupee depreciates

By Wealth Trust Securities

The secondary bond market on 6 May 2024 kicked off the week on an optimistic note, with robust transaction volumes and yields continuing to decline. Trading as usual centred on the short to medium end of the yield curve with a specific emphasis on 2026 to 2032 durations.

In particular, the popular 15.12.26 maturity continued to experience interest, with yields falling to an intraday low of 10.63% from an intraday high of 10.70% on the back of robust volumes. Similarly, the other 2026 tenors (i.e. 15.05.26 and 01.06.26) were seen dropping from intraday high of 10.60% to a low of 10.50%, also on the back of sizeable volumes. Meanwhile the 2028 tenors (i.e. 15.03.28, 01.05.28 and 01.07.28) also saw yields dip to intraday lows of 11.40% from intraday highs of 11.58%. Trades were also observed on the 2027 tenors (i.e. 01.05.27 and 15.09.27), hitting intraday low of 10.95% from intraday high of 11.05%. In addition, trades were seen on the relatively longer tenor bonds of 15.05.30 and 01.10.32 at the rate of 12.10% and 12.35% to 12.25% respectively.

The total secondary market Treasury bond/bill transacted volume for 3 May was Rs. 21.21 billion.

In money markets, the weighted average rate on overnight call money was at 8.64% and repo was at 9.14%.

The net liquidity surplus stood at Rs. 139.25 billion yesterday as an amount of Rs. 9.00 billion was withdrawn from Central Banks SLFR (Standard Lending Facility Rate) of 9.50% against an amount of 

Rs. 188.25 billion deposited at Central Banks SDFR (Standard Deposit Facility Rate) of 8.50%. 

Further, the DOD (Domestic Operations Department) of Central Bank injected liquidity by way of an overnight and 7-day term reverse repo auction for Rs. 10.00 billion and Rs. 30.00 billion at the weighted average rates of 8.65% and 8.85%.

Forex Market 

In the Forex market, the USD/LKR rate on spot contracts closed the day depreciating to Rs. 298.00/298.50 against its previous day’s closing level of 

Rs. 297.15/297.35.

The total USD/LKR traded volume for 3 May was $ 50.65 million.

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