Secondary Bond Market Rallies as Yield Curve Shifts Downward 📈

Sri Lanka’s secondary bond market saw a strong performance last week, driven by a surge in system liquidity and institutional demand. • Liquidity & Money Market: Overnight liquidity hit a six-month high, exceeding Rs. 200 Bn. This abundance pushed the weighted average call money and repo rates down to 7.76% and 7.77% respectively, easing from the previous week's highs. • Secondary Bond Performance: Yields declined across the curve due to aggressive buying pressure. • Short-term: 2026 maturities traded between 8.35%–8.30%. • Medium-term: 2028 tenors saw yields drop as low as 9.05%. • Long-term: 2035 maturities declined to the 11.15%–10.98% range, supported by significant block buying. • Treasury Bill Auction: Yields fell across all maturities, reversing a four-week upward trend. • 91-day: 7.93% (-2 bps) • 182-day: 8.36% (-8 bps) • 364-day: 8.47% (-1 bp) Total raised amounted to Rs. 137.50 Bn across both phases, with strong investor appetite. • Foreign Holdings & Forex: Foreign holdings of rupee securities saw a net outflow of Rs. 550 Mn, bringing the total to Rs. 139.93 Bn. The USD/LKR remained steady, closing the week at Rs. 309.76/309.80. _Data based on weekly reports from Wealth Trust Securities and CBSL._