Secondary bond market yields edge up marginally

• T -bill yields edge down ahead of Rs.105 b auction
• Rupee advances further

By Wealth Trust Securities

The secondary bond market yesterday remained muted with yields edging up slightly, albeit on thin volumes transacted. Limited trading activity was observed on selected maturities. Accordingly, the 15.09.29 maturity saw its yield edge up from 12.05% to 12.08%. The 15.05.30 and 01.10.32 maturities traded at levels of 12.14% to 12.15% and 12.24% to 12.25% respectively as well.

However, in contrast to the bond market, the secondary Treasury bill market saw significant buying interest, particularly on short term bills. September and October 2024 maturities (close to 3 months) changed hands from levels of 9.95% to 9.85% on the back of considerable volumes. Additionally, trades were observed on a July 2025 maturity at 10.10%. 

The Treasury bill auction scheduled for today will offer a total volume of Rs. 105.00 billion, a decrease of Rs. 85.00 billion from the previous week. This will consist of Rs. 30.00 billion on the 91-day maturity, Rs. 40.00 billion on the 182-day and Rs. 35.00 billion on the 364-day maturity.

For context, at last Wednesday’s Treasury bill auction (03/07/24) the weighted average rates remained unchanged, after four consecutive weeks of increases. The yield on the 91-day maturity was recorded at 10.07%, the 182-day maturity at 10.19%, and the 364-day maturity at 10.31%.

The total secondary market Treasury bond/bill transacted volume for 8 July was 

Rs. 5.79 billion. In money markets, the weighted average rate on overnight call money was at 8.72% and repo was at 8.86%.

The net liquidity surplus stood at Rs. 58.59 billion yesterday as an amount of Rs. 22.56 billion was withdrawn from Central Banks SLFR (Standard Lending Facility Rate) of 9.50% against an amount of Rs. 138.00 billion been deposited at Central Banks SDFR (Standard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. 6.86 billion and Rs. 50.00 billion at the weighted average rates of 8.59% and 8.96% respectively.

Forex Market 

In the Forex market, the USD/LKR rate on spot contracts closed the day appreciating to Rs.303.90/304.05 against the previous day’s closing level of 

Rs. 304.35/304.50.

The total USD/LKR traded volume for 08 July was 

$ 49.95 million.

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