Secondary Bond Market Kicks of the Week on a Bullish Note

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Daily report for the 14th October 2024 – Courtesy Wealth Trust Securities Ltd

  • Secondary Bond Market Kicks of the Week on a Bullish Note
  • Rs 97.00 Bn Treasury Bill Auction in Focus
  • Rupee depreciates

The Secondary Bond Market yesterday kicked off the new trading week on a bullish note. Yields declined on the back of strong demand, with market activity and volumes transacted seen at robust levels.

The shorter tenor maturities of 01.08.25 and 01.02.26 were seen changing hands at the rates of 9.79% and 10.00% respectively. The 15.12.27 maturity was seen trading down from 11.25% to 11.185%. The popular and liquid 15.02.28 and 15.03.28 maturities were seen trading down from 11.50% to 11.43%. The relatively longer 2028 tenors of 01.07.28 and 15.12.28, changed hands at the rates of 11.55%-11.50% and 11.63%-11.60% respectively. The yield on the 15.09.29 maturity declined from 11.77% to 11.70% intraday. Additionally, trades were seen on the medium tenor 15.05.30, 01.12.31 and 01.10.32 maturities at the rates of 12.00%, 12.10%-12.11% and 12.16%-12.15% respectively.

Meanwhile, the secondary bill market yesterday saw July and October 2025 maturities (close to 12 months) changing hands within the range of 9.76% and 9.85%-9.75% respectively.

This comes ahead of the Treasury bill auction due today, which will have a total amount of Rs. 97 billion on offer, an increase of Rs. 12.00 billion over the previous week. This will consist of Rs. 37.00 billion on the 91-day, Rs 40.00 billion on the 182-day and Rs. 20.00 billion on the 364-day maturities.

For context, at the weekly Treasury Bill auction held last Wednesday: yields were seen declining for the third consecutive week, reflecting the bullish sentiment in the secondary market. In particular, the shorter tenor securities saw rates fall steeply to register averages below 10.00%, reaching levels last seen in early September 2024. Accordingly, the weighted average rate for the 91-day tenor dropped by 37 basis points to 9.69%, while the 182-day tenor decreased by 42 basis points to 9.95%. The 364-day tenor saw a marginal decline of 4 basis point, bringing the rate to 10.00%. Total bids received exceeded the offered amount by 2.86 times, and the entire Rs 85.00 billion on offer was successfully raised at the 1st phase. An additional Rs.8.5 billion offered through the 2nd phase was fully subscribed as well.

The total secondary market Treasury bond/bill transacted volume for 11th October was Rs. 32.72 billion.

In money markets, the weighted average rates on overnight call money and Repo stood at 8.51% and 8.77% respectively. The DOD (Domestic Operations Department) of Central Bank injected liquidity by way of an overnight repo auction for Rs. 10.00 billion at the weighted average rate of 8.47%.

The net liquidity surplus stood at Rs. 165.31 billion yesterday. No funds were withdrawn from the Central Banks SLFR (Standing Lending Facility Rate) of 9.25%, while an amount of Rs. 175.31 billion was 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 closed the day down at Rs. 293.75/294.00 against its previous day’s closing level of Rs. 292.75/292.95.

The total USD/LKR traded volume for 11th October was US $ 59.45 million.

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