Secondary bond market yields edge down on robust activity

• Rupee depreciates slightly

By Wealth Trust Securities 

The secondary bond market yesterday witnessed bullish sentiment drive down yields, with robust activity and overall transaction volumes. Trading continued to be predominantly on the short end of the yield curve.

Accordingly, the 2026 tenors; 01.02.26 and 01.08.26 maturities saw its yields drop down from intraday highs to lows of 10.20% to 10.15% and 10.40% to 10.35% respectively. The popular liquid 15.12.27 saw considerable buying interest with yields dropping to fresh lows of 11.60% from intraday highs of 11.64% on the back of sizeable volumes. Similarly, the 01.05.27 maturity was seen transacting at the rate of 11.35%. This demand extended to the 2028 tenors: with the yield on the 15.02.28, 01.05.28 and 01.07.28 maturities moving down the ranges/rates of 11.75% to 11.68%, 11.75% and 11.82% to 11.80% respectively. The 15.09.29 maturity also experienced strong buying that drove its yield to a low 12.00% as against a high of 12.03%. Additionally, trades were observed on the medium tenor 15.05.30 bond at a low of 12.15% as against a high of 12.17%.

As such, two-way quotes across the yield curve registered a notable dip at the close of the day, despite a resurgence in selling pressure that kept rates from dropping further. 

The total secondary market Treasury bond/bill transacted volume for 17 July was Rs. 81.16 billion.

In money markets, the weighted average rates on overnight call money and Repo stood at 8.75% and 9.01% respectively. The DOD (Domestic Operations Department) of Central Bank injected liquidity by way of an overnight reverse repo auction for Rs. 20.00 billion at a weighted average rate of 8.72%.

The net liquidity surplus stood at Rs. 94.57 billion yesterday as an amount of Rs. 114.57 billion was deposited at Central Banks SDFR (Standard Deposit Facility Rate) of 8.50%. 

 Forex Market 

In the Forex market, the USD/LKR rate on spot contracts closed the day depreciating slightly further to Rs. 304.00/304.10 as against its previous day’s closing level of Rs. 303.80/304.00.

The total USD/LKR traded volume for 17 July was 

$ 39.75 million. 

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