Secondary Bond Market Holds Steady Ahead of Rs 295 billion Auction

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Daily report for the 26th June 2025- Courtesy Wealth Trust Securities Ltd

  • Secondary Bond Market Holds Steady Ahead of Rs 295 billion Auction
  • Rupee Appreciates

The secondary bond market yesterday saw yields move sideways – trading within a narrow band. The market appeared to consolidate ahead of the upcoming auction, with two-way quotes in the secondary market closing broadly unchanged. Trading activity and transaction volumes were subdued.

Sparse trades were observed on relatively thin volumes confined to selected maturities. The 01.05.27 and 15.09.27 maturities were observed trading at the rates of 8.40% and 8.53% respectively. The 01.05.28 and 15.10.28 maturities traded at the rate of 8.85% and 8.94% respectively. The 15.03.31 maturity traded within the rates of 10.12%-10.10%. The 15.12.32 maturity traded at the rate of 10.42%.

However, secondary market bills were active. September and November maturities were seen 7.60% and 7.75% respectively (close to three months). December 2025 maturities were seen trading at the rate of 7.80% (close to 6 months). The April 2026 maturities were seen trading within the rates of 7.95%-7.7895% and June 2026 (close to 1 year) maturities were seen trading within the rates of 7.95%-7.91%.

This comes ahead of the Rs 295.00 billion Treasury Bond Auction scheduled to be held today, the 27th of June 2025. It would incidentally be the largest for the year 2025 so far and be tie with the all-time highest offered amount recorded at the auction conducted on 13th June 2024.   The auction will be comprised of:

  1. Rs. 120.00 billion from a 15th October 2029 Maturity bearing a coupon rate of 10.35%
  2. Rs. 40.00 billion from a 15th March 2031 Maturity bearing a coupon rate of 11.25%
  3. Rs. 115.00 billion from a 01st November 2033 Maturity bearing a coupon rate of 09.00%
  4. Rs. 20.00 billion from a 01st July 2037 Maturity bearing a coupon rate of 10.75%

The settlement for which will be held on 01st July 2025.

For context, the previous round of Treasury Bond auctions held on the 12th of June were fully subscribed, with the entire Rs. 111 billion total offered amount successfully raised at the first phase in competitive bidding and total bids exceeding the offer by 2.40 times. The two offered maturities at that auction recorded the following results:

The shorter tenor 15.10.29 maturity (10.35% coupon) recorded a bullish outcome and raised the full Rs. 41 billion maturity-wise offered amounts in the first phase at a weighted average yield of 9.41%, coming in below initial market expectations.

A longer tenor 15.12.32 maturity (11.50% coupon) also raised the entire maturity-wise offered amount of Rs. 70 billion at a yield of 10.47%. However, this was slightly above market expectations as the maturity was seen quoted at the rate of 10.15%/10.25% just prior to the auction.

The total secondary market Treasury bond/bill transacted volume for 24th June was Rs. 26.97 billion.

In money markets, the weighted average rates on overnight call money and Repo stood at 7.74% and 7.75% respectively.

The net liquidity surplus stood at Rs. 123.53 billion yesterday.

Forex Market

In the Forex market, the USD/LKR rate on spot contracts closed the day appreciating further to Rs. 299.95/300.10 as against 300.05/300.15 the previous day.

The total USD/LKR traded volume for 25th June was US $ 80.15 million.

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