Secondary bond market yields edge up on profit taking

• Rupee appreciates

By Wealth Trust Securities

The secondary bond market experienced some selling pressure yesterday, leading to an uptick in yields as market participants looked to realise gains from the recent bull run. However, renewed buying interest kicked in at the elevated levels, stabilising the market and limiting further upward movement. The market remained active; however, transaction volumes were moderate and primarily focused on bonds maturing between 2026 and 2029 durations.

The 15.12.27 maturities saw yields increase from 11.39% to 11.50%. Yields on the 2028 tenors, specifically the liquid 15.02.28 maturity rose to an intraday high of 11.66%, up from an intraday low of 11.45%. The 15.12.28 maturity followed suit, with yields rising to an intraday high of 11.80% from a low of 11.65%. Similarly, the popular 15.06.29 maturity was observed changing hands at the elevated level of 11.90%. Additionally, trades were observed on the medium tenor 15.10.30, holding broadly steady to trade within the range of 12.20% to 12.24%.

The total secondary market Treasury bond/bill transacted volume for 2 October was Rs. 50.98 billion.

In money markets, the weighted average rates on overnight call money and Repo stood at 8.65% and 8.78% respectively. The DOD (Domestic Operations Department) of Central Bank injected liquidity by way of overnight reverse repo auction for a total volume of Rs. 18.91 billion at a weighted average rate of 8.38%.

The net liquidity surplus stood at Rs. 114.74 yesterday. An amount of Rs. 0.83 billion was withdrawn from the Central Banks SLFR (Standing Lending Facility Rate) of 9.25% as against Rs. 134.47 billion deposited at Central Banks SDFR (Standard Deposit Facility Rate) of 8.25%. 

Forex Market 

In the Forex market, the USD/LKR rate on spot contracts appreciated to close the day up at Rs. 294.00/294.50 yesterday against its previous day’s closing level of Rs. 296.40/296.80.

The total USD/LKR traded volume for 2 October was $ 66.60 million. 

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