Secondary market rallies on buying interest ahead of policy decision

By First Capital Research
The secondary market witnessed a revival in buying interest, leading to a downward adjustment in yields amid improved investor sentiment ahead of today’s monetary policy announcement. 
Market activity remained elevated, while trading volumes were observed at moderate levels.
Starting at the short end, the 15.09.2027 maturity traded at 9.60 percent. Moving on to the 2028 segment, the 15.02.2028, 01.05.2028, 01.07.2028 and 15.12.2028 maturities traded within the range of 9.95 percent to 10.18 percent. 
The 15.06.2029 bond changed hands from 10.25 percent to 10.00 percent, followed by the 01.10.2032 bond from 11.25 percent to 11.00 percent and the 01.06.2033 bond from 11.30 percent to 11.20 percent. 
Further along the curve, the 15.06.2034 maturity traded at 11.35 percent, while the 15.08.2036 bond traded at 11.45 percent.
Moreover, the CBSL introduced a maximum loan-to-value (LTV) ratio of 70.0 percent for gold-backed credit facilities granted by the licensed banks and licensed finance companies. Along with that, the CBSL also tightened the existing maximum LTV limits by 10.0 percent on credit granted for personal vehicles, from 50 percent to 40 percent and for commercial vehicles from 70 percent to 60 percent. These will come into effect from May 25, 2026. 
Overnight liquidity in the banking system contracted to Rs.136.98 billion, from Rs.141.27 billion recorded previously.