Secondary bond market yields hold steady

By Wealth Trust Securities

The secondary bond market witnessed subdued activity yesterday, with relatively few trades and low transaction volumes. Overall, the market saw two-way quotes move sideways, with yields remaining broadly steady. Yields consolidated at levels seen prior to the monetary policy announcement earlier in the week, at which policy rates were kept unchanged. An initial knee-jerk reaction to monetary policy announcement caused yields to spike, before subsequently recovering following the bullish outcome at the Treasury Bill auction the previous day.

Accordingly limited trades were seen on selected maturities. The 1.6.26 maturity was seen trading at 9.65%. The 15.9.27 maturity saw yields edge up marginally from 10.40% to 10.45%. Meanwhile the 2028 tenors of 1.5.28 and 15.12.28 were seen trading at 10.75% and 10.85% to 10.80% respectively. The yield on the medium tenor 1.10.32 was seen edging down from an intraday high of 11.87% to an intraday low of 11.85% on the back of considerable volumes. On the other hand, secondary market bills witnessed continued buying interest with yields edging down, on the back of substantial volumes. August and November 2024 maturities witnessed yields dropping from 8.58% to 8.55% and 8.96% to 8.84% respectively. 

This follows the bullish outcome at the previous day’s primary auction.

The total secondary market Treasury bond/bill transacted volume for 29 May was Rs. 94.45 billion.

In money markets, the weighted average rates on overnight call money and Repo stood at 8.66% and 8.82% respectively. 

The net liquidity surplus stood at Rs. 200.70 billion yesterday as an amount of Rs. 0.02 billion was withdrawn from Central Banks SLFR (Standard Lending Facility Rate) of 9.50% against an amount of Rs. 200.72 billion being deposited at Central Banks SDFR (Standard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 broadly steady at Rs. 301.85/301.90 against its previous day’s closing level of Rs. 301.60/302.00.

The total USD/LKR traded volume for 29 May was 

$ 48.60 million. 

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