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Daily report for the 25th November 2024 – Courtesy Wealth Trust Securities Ltd
- Secondary Bond Market Starts Off Slow; Yields Broadly Steady
- 6th and Final Monetary Policy Announcement for 2024 In Focus
- Rs. 205 Bn Treasury Bond Auction Details Announced
- Rupee Depreciates Slightly
The secondary bond market began the new trading week on a dull note yesterday, remaining virtually at a standstill for much of the day, apart from some sparse trades on slim transaction volumes. Yields were seen holding broadly steady, as market participants gear up and adopted a cautious approach ahead of an action-packed week. This Wednesday (27th November) will see the highly anticipated 6th and final Monetary Policy Announcement [MPA] for the year 2024. This will be followed by an Rs 205.00 billion Treasury Bond auction due to be held on the 28th of November (Thursday).
Accordingly, very limited trades were observed on the select maturities. The 01.08.26 and 01.05.27 maturities were seen trading at the rates of 10.00% and 10.75%-10.78% respectively.
Meanwhile, in secondary market bills December 2024, February 2025 (approximately 3 months) and May 2025 (approximately 6 months) maturities were seen changing hands at the rates of 9.23%, 9.25% and 9.54% respectively.
For context, at the 5th (previous) monetary policy review of 2024 announced on 27th September, the Monetary Policy Board of the Central Bank of Sri Lanka decided to pause its monetary easing cycle, keeping key policy rates unchanged. The Standing Deposit Facility Rate (SLDR) was maintained at 8.25%, while the Standing Lending Facility Rate (SLFR) remained at 9.25%. The Statutory Reserve Ratio (SRR) was also held steady at 2.00%. Since the current monetary easing cycle commenced in June 2023, policy rates have been reduced by a cumulative 725 basis points.
As per the official press release for the previous MPA: The Board noted that the current accommodative monetary policy stance is yielding the expected outcomes, particularly in terms of the continued easing of market lending interest rates, expansion of credit to the private sector, and a strong rebound in domestic economic activity amidst a low inflation environment.
The details of the upcoming Treasury Bond auction, with a total offered amount of Rs. 205 billion and scheduled for November 28, have been announced. The auction will be comprised of:
- 85.00 billion: Maturing on October 15, 2028, with a coupon rate of 11.00%.
- 75.00 billion: Maturing on March 15, 2031, with a coupon rate of 11.25%.
- 50.00 billion: Maturing on November 1, 2033, with a coupon rate of 9.00%.
The total secondary market Treasury bond/bill transacted volume for 22nd November was Rs. 7.94 billion.
In money markets, the weighted average rates on overnight call money and Repo stood at 8.55% and 8.65% respectively. The DOD (Domestic Operations Department) of Central Bank injected liquidity by way of an overnight repo auction for Rs. 23.74 billion at the weighted average rate of 8.49%.
The net liquidity surplus stood at Rs. 179.92 billion yesterday. An amount of Rs 0.28 billion was withdrawn from the Central Banks SLFR (Standing Lending Facility Rate) of 9.25%, while an amount of Rs. 203.93 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 depreciating slightly to Rs. 291.25/291.35 against its previous day’s closing level of Rs. 291.00/291.10.
The total USD/LKR traded volume for 22nd November was US $ 59.63 million.
(References: Central Bank of Sri Lanka, Bloomberg E-Bond trading platform, Money broking companies)
