Yield curve nudges up as secondary market activity gains traction

By First Capital Research

The secondary market demonstrated mixed sentiment yesterday, while trading activity remained moderate in terms of volume. 

The secondary market yield curve saw mixed activity along the short to mid end, with notable trades occurring among the 2028, 2029, 2030, 2031 and 2032 maturities. 

In the 2028 segment, bonds maturing on 15.01.2028, 15.02.2028, 15.03.2028 and 01.05.2028 traded within the 9.00 percent to 9.10 percent range. The 15.10.2028 and 15.12.2028 bonds were seen trading within the narrow range of 9.18 percent to 9.20 percent. 

Moving on to the 2029 maturities, the 15.09.2029, 15.10.2029 and 15.12.2029 bonds traded between 9.60 percent and 9.65 percent. Furthermore, the 15.05.2030 maturity traded between 9.74 percent and 9.78 percent, whilst the 15.03.2031 maturity changed hands at 10.10 percent. Lastly, within the 2032 segment, the maturities dated 01.10.2032 and 15.12.2032 traded between 10.50 percent and 10.55 percent. 

The Central Bank conducted its weekly T-bill auction yesterday, raising the full amount offered of Rs.43.0 billion, despite receiving bids totalling Rs.80.8 billion. For the three-month maturity, Rs.5.0 billion was accepted, with the weighted average yield declining by 4bps to 7.53 percent. The six-month bill saw the highest uptake at Rs.35.9 billion, while the 12-month maturity recorded Rs.2.1 billion. Weighted average yields for the six-month and 12-month bills remained unchanged at 7.89 percent and 8.02 percent, respectively.

On the external front, the Sri Lankan rupee depreciated slightly against the US dollar, closing at Rs.302.62/US dollar, compared to Rs.302.61/US dollar recorded the previous day. Overnight liquidity in the banking system contracted to Rs.169.0 billion, from Rs.198.8 billion recorded the previous day.