Secondary Bond Market Steady as Geopolitical Tensions Ease 📈

The Sri Lankan secondary bond market closed the week steady to marginally lower, buoyed by optimism regarding a potential diplomatic resolution to US–Iran tensions and stabilizing oil prices. • Market Trends & Yields: Yields saw compression particularly in liquid 2029–2034 tenors. Key trades included: 2027 tenors: 8.75% – 8.83% 2029 tenors: 9.90% – 10.05% 2034 tenors: 11.09% – 11.15% • Treasury Bill Auction: T-bill yields rose for the fourth consecutive week. The 91-day bill increased by 20 bps to 8.15%, while 182-day and 364-day bills rose to 8.22% and 8.52% respectively. The auction raised Rs. 84.04 Bn against an Rs. 90 Bn offer. • Foreign Holdings & Liquidity: Foreign Holdings: Recorded a net inflow for the first time in seven weeks (Rs. 2 Mn), bringing the total to Rs. 142.92 Bn. Market Liquidity: Inter-bank surplus remained healthy at Rs. 106.32 Bn. • Currency & Forex: The USD/LKR spot rate depreciated slightly, closing at Rs. 316.55/316.70 compared to the previous week's Rs. 315.50/315.60. Daily average volumes stood at US$ 88.38 Mn.