Secondary Bond Market Yields Edge Up Ahead of Rs 200 Bn Auction

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Daily report for the 09th July 2025- Courtesy Wealth Trust Securities Ltd

  • Secondary Bond Market Yields Edge Up Ahead of Rs 200 Bn Auction
  • Rupee Appreciates

The secondary bond market yesterday saw yields edge up marginally as the uncertainty stemming from the imposition of ‘Reciprocal Tariffs’ by the US continued to weigh down on market sentiment. Trading activity and transaction volumes were seen at subdued levels.

Accordingly, limited trades were observed on selected maturities. The 01.09.28/15.10.28 and 15.12.28 maturities were seen trading at the rates of 8.95% and 8.975% respectively. The 15.10.29 and 15.12.29 maturities were seen trading at the rates of 9.45% and 9.48%-9.51% respectively.

In secondary market bills, trades were observed on August, September, November and December bills at the rates of 7.52%, 7.60%, 7.68% and 7.75%-7.73% respectively.

This comes ahead of a round of Treasury Bond auctions, due on the 11th of July (Today) with a total offered amount of Rs 200.00 billion.

The auction will be comprised of:

  1. Rs. 75.00 billion from a 15th October 2029 Maturity bearing a coupon rate of 10.35%
  2. Rs. 75.00 billion from a 01st June 2033 Maturity bearing a coupon rate of 09.00%
  3. Rs. 50.00 billion from a 15th September 2034 Maturity bearing a coupon rate of 10.25%

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

For context at the previous round of Treasury Bond auctions held on Friday, 27th June 2025: Sri Lanka conducted its largest Treasury Bond auction of the year, matching the record-high offer of Rs. 295 billion previously set in June 2024. Four bond maturities were offered, with all except the 2033 tenor being fully subscribed during the first phase of competitive bidding. Due to the partial subscription of the 2033 maturity, a second phase was opened exclusively for that tenor. Altogether, the auction raised a total of Rs. 240.74 billion, representing an 81.61% subscription rate across both phases.

Maturity-wise outcomes:

  • 15.10.29 (10.35% coupon): Fully subscribed in the first phase at a bullish weighted average yield of 9.41%.
  • 15.03.31 (11.25% coupon): Fully subscribed in the first phase at a yield of 10.00%.
  • 01.11.33: Partially subscribed, raising Rs. 60.74 billion across both phases at a yield of 10.68%.
  • 01.07.37: Fully subscribed in the first phase, meeting the Rs. 20 billion targets at a yield of 10.83%.

The total secondary market Treasury bond/bill transacted volume for 08th July was Rs. 52.32 billion.

In money markets, the weighted average rates on overnight call money and Repo stood at 7.75% and 7.76% respectively.

The net liquidity surplus was recorded at Rs. 93.94 billion yesterday. An amount of Rs. 1.43 billion was withdrawn from the Central Banks SLFR (Standing Lending Facility Rate) of 8.25%, while an amount of Rs. 95.37 billion was deposited at Central Banks SDFR (Standard Deposit Facility Rate) of 7.25%.

Forex Market

In the Forex market, the USD/LKR rate on spot contracts closed the day appreciating to Rs. 300.45/300.55 as against Rs. 300.75/300.85 the previous day.

The total USD/LKR traded volume for 08th July was US $ 66.15 million.

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