📈 Rs. 150 B Treasury Bond Auction Delivers Mixed Outcome Amid Global Tensions

Sri Lanka's latest Treasury bond auction yielded mixed results yesterday, failing to raise the total offered amount across both phases, with all bids for the longest maturity rejected. Despite global pressures like Middle Eastern tensions and volatile crude oil prices fueling a bearish bias, weighted average yields finished below market expectations. • Auction Performance & Yields: • Total bids received to accepted ratio stood at 1.97 times. • 15.05.30 Maturity (Short Tenor): Issued at a weighted average yield of 11.65%, lower than the pre-auction market trades of 12.50%. It failed to meet its full funding target. • 15.12.32 Maturity: Issued at a weighted average yield of 12.69%, also failing to raise its offered amount. • 01.07.37 Maturity (Long Tenor): All bids were completely rejected. • Secondary Bond Market: • Yields initially spiked on fears of escalating US-Iran tensions and rising oil prices. • Rates eased post-auction as two-way quotes dropped, with the 01.08.30 maturity trading down to 12.20%. Transaction volumes were supported by major block trades. • Money Market & Liquidity: • Net liquidity surplus stood at Rs. 66.62 Bn. • Rs. 92.62 Bn was deposited at the Central Bank's Standing Deposit Facility Rate (SDFR) of 8.25%, while Rs. 26.00 Bn was withdrawn from the Standing Lending Facility Rate (SLFR) of 9.25%. • Overnight call money and repo weighted average rates hit 9.19% and 9.24% respectively. • Forex Market: • The USD/LKR spot contract weakened, closing at Rs. 335.00/337.50 compared to the previous close of Rs. 332.25/333.00. • Total traded volume for June 10, 2026, was US$ 85.67 Mn.