Secondary bond market yields surge; rupee depreciates slightly

By Wealth Trust Securities

The secondary bond market yesterday kicked off the trading week with yields rising further, from already elevated levels, on the back of continued selling pressure. The market experienced increased activity and saw sizeable volumes transacted in the early hours, which subsequently moderated towards the latter part of the day. This is against the backdrop of the uncertainty stemming from the upcoming Presidential election and a steady flow of Treasury bond auctions scheduled in rapid succession.  

Accordingly, the 01.06.26 and 15.12.26 maturities were seen trading at the elevated levels of 10.55% and 10.70% to 10.75% respectively. Similarly, the yield on the 15.01.27 maturity was observed moving up from 10.80% to 10.85%. The 2028 tenors experienced a steep increase with the yield on the 01.07.28 and 15.12.28 maturities increasing from intraday lows to highs of 12.30% to 12.43% and 12.45% to 12.50% respectively. The 15.09.29 also saw a significant uptick in rates from an intraday low of 12.40% to a high of 12.48%. In addition, the medium tenor 15.10.30 maturity was seen changing hands within the range of 12.805% to 12.82%.

The total secondary market Treasury bond/bill transacted volume for 2 August was Rs. 12.01 billion.

In money markets, the weighted average rate on overnight call money was at 8.55% and repo was at 8.82%.

The net liquidity surplus was recorded at to Rs. 99.47 billion yesterday. An amount of Rs. 120.98 billion was deposited at Central Banks SDFR (Standard Deposit Facility Rate) of 8.25% while an amount of Rs. 1.51 billion was borrowed from its SLFR (Standard Lending Facility Rate) of 9.25%.

The DOD (Domestic Operations Department) of Central Bank injected liquidity by way of an overnight reverse repo auction for Rs. 20.00 billion at the weighted average rate of 8.51%.

Forex Market 

In the Forex market, the USD/LKR rate on spot contracts depreciated yesterday to close at Rs. 302.30/302.43 against its previous day’s closing level of Rs. 301.95/302.00.

The total USD/LKR traded volume for 2 August was $ 54.65 million.

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