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Daily report for the 07th January 2025 – Courtesy Wealth Trust Securities Ltd
- Secondary Bond Market Rates Continue to Edge Up
- Back-to-Back Auctions
- Rs 102 Bn T-Bill Auction in Focus
- Rs 190 Bn T-Bond Auction Details Announced
- Rupee Depreciates
The Secondary Bond market yields continued to increase ahead of the upcoming Treasury bond auction due on Thursday, 09th January. Trading activity and transaction volumes were seen at healthy levels. However, renewed buying interest was seen kicking in at the elevated levels which curtailed further upwards movement.
The 2026 tenors continued to buck the trend and saw yields remain relatively stable with the 01.02.26, 15.05.26 and 01.08.26 maturities seen trading at the rates of 8.91%, 9.25% and 9.28%-9.30% respectively. However, the rest of the yield curve was seen edging upwards. The 15.01.27 maturity was seen trading at the rate of 9.58%. The 2028 tenors experienced the most activity. The 15.02.28, 01.07.28, 15.10.28 and were seen trading at the elevated rates of 10.20%, 10.42%-10.45% and 10.52%-10.55% respectively. The 15.10.30 maturity was reported traded at the rates of 11.15%-11.20%.
This comes ahead of the Treasury bill auction due today, which will have a total amount of Rs. 102.00 billion on offer, a decrease of Rs. 66.00 billion over the previous week. This will consist of Rs. 30.00 billion on the 91-day maturity and Rs 30.00 billion on the 182-day and Rs. 42.00 billion on the 364-day maturity.
For reference, at the previous Treasury Bill auction conducted last Wednesday (01/01/2025), weighted average rates declined across all three maturities for the 4th consecutive week. As such rates were seen continuing on a downward trajectory with a reduction in yields observed on at least one tenor over the last 8 weeks. Accordingly, the weighted average rates on the 91-day tenor dropped by 07 basis points to 8.55%, the 182-day tenor by 05 basis points to 8.72% and the 364-day tenor by 02 basis point to 8.94%. Total bids received exceeded the offered amount by 2.42 times, and the entire Rs 168.00 billion on offer was successfully raised at the 1st phase in competitive bidding. An additional Rs. 16.80 billion was raised in the second phase (the maximum aggregate amount offered), out of a substantial total market subscription of Rs. 114.86 billion.
The details of the next round of Treasury Bond auction, scheduled to be held on the 09th of January, were announced. The round of auctions will have on offer a total amount of Rs 190.00 billion. This will be comprised of Rs 60.00 billion from a 15th of October 2028 maturity bearing a coupon rate of 11.00%, Rs 80.00 billion from a 15th of October 2030 maturity bearing a coupon rate of 11.00% and Rs 50.00 billion from a 01st November 2033 maturity bearing a coupon rate of 09.00%.
The total secondary market Treasury bond/bill transacted volume for 06th of January was Rs. 15.55 billion.
In money markets, the weighted average rates on overnight call money and Repo stood at 7.98% and 8.03% respectively yesterday.
The Domestic Operations Department (DOD) injected an amount of Rs 6.48 billion via a term reverse repo auction at the rate of 8.06%.
The net liquidity surplus stood at Rs. 136.22 billion yesterday. Rs 0.03 billion was withdrawn from the Central Banks SLFR (Standing Lending Facility Rate) of 8.50%, while an amount of Rs. 142.73 billion was deposited at Central Banks SDFR (Standard Deposit Facility Rate) of 7.50%.
Forex Market
In the Forex market, the USD/LKR rate on spot contracts closed the day depreciating Rs. 296.00/296.30 as against its previous day’s closing level of Rs. 295.20/296.00.
The total USD/LKR traded volume for 06th January was US $ 50.48 million.
(References: Central Bank of Sri Lanka, Bloomberg E-Bond trading platform, Money broking companies)
