Rs. 250 Bn Bond Auction Sees Strong Market Rally 📈

Sri Lanka’s secondary bond market rallied yesterday as Treasury bond auction yields matched or beat market expectations, despite global geopolitical tensions. While the total auction was undersubscribed, high liquidity and aggressive buying drove rates down post-auction. • Auction Results: The government raised Rs. 176.62 Bn out of a targeted Rs. 250 Bn across four maturities. Despite the shortfall, the bid-to-acceptance ratio was a robust 2.47 times. • Yield Performance: 01.08.30 Maturity: Issued at a weighted average yield of 10.16% (fully accepted). 15.06.34 Maturity: Issued at 11.24% (fully accepted). 15.08.36 Maturity: Issued at 11.40%, which was notably below market expectations. 15.08.39 Maturity: All bids for this long-term tenor were rejected. • Secondary Market & Liquidity: A post-auction rally saw the 15.06.34 bond drop to 11.08% in secondary trading. National liquidity remains high with a net surplus of Rs. 247.19 Bn, supported by heavy deposits at the Central Bank’s Standing Deposit Facility. • Currency Market: The USD/LKR spot exchange rate closed slightly weaker at Rs. 322.50/323.00, compared to the previous day's Rs. 322.00/322.40. Total traded volume stood at US$ 43.75 Mn. _Note: Results based on provisional auction data._