Secondary bond market yields edge up further

• Rs. 180 b on offer at weekly Treasury bill auction
• Rupee appreciates

By WealthTrust Securities

The secondary bond market yesterday saw yields increase further, as the negative to bearish sentiment was carried over from the day prior. 

Market activity was muted, as market participants were seen adopting a watchful stance ahead of the Presidential election and the upcoming Rs. 290 billion T Bond auction due to be held on 12 September (this Thursday).

Limited trades were observed on selected tenors. The 01.02.26 was seen trading at 10.65%. The 01.05.27 maturity was seen trading at the rate of 12.60%. The 2028 maturities of 01.07.28 and 15.12.28 were seen changing hands at the elevated levels of 13.20% to 13.23% collectively. The 15.07.29 and 15.09.29 maturity saw yields increase to 13.35% and from 13.45% to 13.50% respectively.

The Treasury bill auction due today will have a total amount of Rs. 180 billion on offer, an increase of Rs. 28 billion over its previous week. This will consist of Rs. 60 billion on the 91-day, Rs. 90 billion on the 182-day, and Rs. 30 billion on the 364-day maturity.

For context, at the weekly Treasury bill auction conducted last Wednesday, weighted average yields on shorter-tenor securities rose for the fifth consecutive week. The 91-day yield increased by 12 basis points to 9.61%, while the 182-day yield climbed 10 basis points to 9.94%. The 364-day yield edged up by two basis points to 10.03%, marking its first increase in four weeks. The entire Rs. 152.00 billion on offer was raised in the first phase, with bids exceeding the offer by 1.62 times.

The total secondary market Treasury bond/bill transacted volume for 9 September was Rs. 18.64 billion.

In money markets, the weighted average rate on overnight call money was at 8.59% and repo was at 8.70%. The DOD (Domestic Operations Department) of the Central Bank injected liquidity by way of overnight and three-day term reverse repo auctions for Rs. 24.36 billion and Rs. 39.00 billion at the weighted average rates of 8.52% and 8.81% respectively.

The net liquidity surplus stood at Rs. 41.98 billion yesterday, as an amount of Rs. 106.17 billion was deposited at the Central Bank’s SDFR (Standard Deposit Facility Rate) of 8.25%, while an amount of Rs. 0.84 was withdrawn from the Central Bank’s SLFR (Standard Lending Facility Rate) of 9.25%.

Forex market 

In the Forex market, the USD/LKR rate on spot contracts appreciated to close trading yesterday at Rs. 300.60/300.75 against its previous day’s closing level of Rs. 301.50/302.00.

The total USD/LKR traded volume for 9 September was $ 55.07 million.

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