Secondary market stays subdued as attention shifts to T-Bond auction

By First Capital Research

The secondary market yesterday saw mixed sentiment and moved through a quiet session overall, amid thin volumes, with activity largely concentrated in the short to belly end of the yield curve.

At the short end of the curve, the 15.02.2028, 01.05.2028 and 01.07.2028 maturities traded at yields of 9.10%, 9.12% and 9.15%, respectively. Turning to 2029 maturities, the 15.06.2029 traded at 9.50% while the 15.09.2029 traded at 9.55%. 

Moving into the belly of the curve, the 2033-2035 segment saw modest activity, with the 01.06.2033 changing hands at 10.45%, the 15.09.2034 at 10.65%, and the 15.06.2035 at 10.70%.

The CBSL conducted a T-Bond auction yesterday, where total acceptances fell short of the initial offer. For the 2030 maturity, Rs. 17.4bn was accepted against an initial offer of Rs. 20.0bn, despite bids totalling Rs. 48.6bn. Meanwhile, the 2035 maturity was fully subscribed, with Rs. 22.0bn accepted in line with the initial offer, on total bids of Rs. 70.5bn. The weightedaverage yields for the two maturities were 9.53% and 10.39%, respectively. On the external front, the LKR depreciatedagainst the USD, closing at Rs. 308.08/USD compared to Rs. 307.91/USD seen previously. Overnight liquidity in the banking system marginally expanded to Rs. 92.3bn from Rs. 91.4bn recorded on the previous day.