Secondary Bond Market Yields Consolidate Ahead of T-Bond Auction

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Daily report for the 08th May 2025- Courtesy Wealth Trust Securities Ltd

  • Secondary Bond Market Yields Consolidate Ahead of T-Bond Auction
  • Rs 80 Bn T-Bond Auction in Focus
  • Rupee Appreciates

The secondary bond market yesterday initially saw very short-tenor bond yields edge lower, while the rest of the yield curve remaining broadly steady. However, at the tail-end of the day profit taking pressure saw rates move up considerably on 2028 and 2029 durations. Market activity and transaction volumes were observed at healthy levels.

The 15.05.26 and 01.06.26 maturities were seen trading at the rate of 8.35%. The 01.05.27 maturity traded down the range of 9.12%-9.08%. The 15.09.27 traded within the range of 9.28%-9.24%.

The 15.02.28 and 15.03.28 maturities traded at the rate of 9.75% and 9.80% respectively. The 01.07.28 and 15.10.28 maturities traded at the rate of 9.85% and 9.90% respectively. The 15.12.28 maturity traded up the range of 9.94%-9.97%. The 15.06.29 and 15.09.29 maturities saw yields increase from 10.18%-10.25% and 10.25%-10.30% respectively. The 15.12.29 maturity was seen trading up from an intraday low to a high of 10.30%-10.35%. The 15.09.34 maturity was seen trading within the range of 11.03%-11.04%. The 15.03.35 maturity was seen trading at the rate of 11.10%.

This comes ahead of the Rs 80.00 billion Treasury Bond Auction scheduled to be held today (09th of May 2025). The auction will be comprised of:

  1. Rs. 35.00 billion from a 15th October 2029 Maturity bearing a coupon rate of 10.35% (a new issuance)
  2. Rs. 45.00 billion from a 01st November 2032 Maturity bearing a coupon rate of 09.00%

The settlement for which will be held on 15th May 2025.

For context the previous round of Treasury Bond auctions were concluded successfully, with the entire Rs. 155.00 billion offered being subscribed across both auction phases. Total bids received were 2.91 times the amount on offer.

  • The 15.06.2029 maturity (11.75% coupon) was fully subscribed at the 1st phase, raising Rs. 60.00 billion at a weighted average yield of 10.30%
  • The 15.03.2031 maturity (10.25% coupon) also raised its full Rs. 55.00 billion at the 1st phase, with a weighted average yield of 10.96%.
  • The 15.03.2035 maturity initially attracted Rs. 15.76 billion (39.40% of offer) at a weighted average yield of 11.22%. However, the balance was successfully raised through the 2nd phase, resulting in full subscription of the Rs. 40.00 billion on offer.

The total secondary market Treasury bond/bill transacted volume for 07th May was Rs. 77.98 billion.

In money markets, the weighted average rates on overnight call money and Repo stood at 7.97% and 7.98% respectively.

The net liquidity surplus stood at Rs. 163.38 billion yesterday. No funds were withdrawn from the Central Banks SLFR (Standing Lending Facility Rate) of 8.50%, while an amount of Rs. 163.38 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 were seen closing the day appreciating to close at Rs. 299.10/299.25 as against 299.37/299.42 the previous day.

The total USD/LKR traded volume for 07th May was US $ 144.93 million.

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