📈 Rs. 140 Bn Bond Auction Sees Yields Fall Amid Record Liquidity

Sri Lanka’s secondary bond market rallied strongly following a highly successful auction by the Public Debt Management Office, which raised the full Rs. 140 billion offered across three maturities. The auction reflected a "bullish" trend driven by a 22-year high in market liquidity. • Auction Outcomes & Yields • 2030 Maturity: Issued at a weighted average yield of 9.50% (fully subscribed). • 2034 Maturity: Issued at a weighted average yield of 10.70% (fully subscribed). • 2037 Maturity: Issued at a weighted average yield of 10.88% (fully subscribed). • Demand: Strong investor appetite with a bid-to-acceptance ratio of 2.79 times. • Market Liquidity & Rates • Net liquidity surplus hit a massive Rs. 341.02 Bn, surpassing the previous day's 22-year record. • Overnight call money and repo rates remained stable at 7.69% and 7.71% respectively. • Aggressive buying in the secondary market pushed rates lower across multiple tenors, including the 2027, 2029, and 2032 maturities. • Currency & Trade Volume • USD/LKR: The Rupee remained steady, closing at Rs. 309.29/309.32 against the US Dollar. • Forex Volume: Total USD/LKR traded volume stood at US$ 123.65 Mn. • Secondary Market: Total transacted volume for bonds/bills reached Rs. 26.43 Bn. Context: Falling yields and high liquidity suggest a favorable environment for government borrowing and potential easing in the broader financial services sector.