📈 Secondary Bond Market Surges Ahead of Key Policy & Auction Decisions

The Sri Lankan secondary bond market kicked off the week with a bullish rally, driving yields down considerably on robust transaction volumes. Optimism was fueled by global oil prices dipping below $ 100 on potential US-Iran peace progress, alongside a further appreciation of the Sri Lankan rupee and easing global yields. • Market Movements & Yields: • Bond yields fell significantly, with the 01.07.28 maturity dropping from an intraday high of 10.18% to 10.00%. The 01.10.32 maturity declined sharply from 11.25% to 11.00% on sizeable volumes. • Short-term maturities like 15.09.27 traded at 9.60%, while long-term tenors like 15.08.36 held at 11.45%. • Upcoming Primary Debt Auctions: • Treasury Bill Auction: Rs. 140.00 Bn is on offer today across 91-day (Rs. 65 Bn), 182-day (Rs. 45 Bn), and 364-day (Rs. 30 Bn) tenors. This follows a previously undersubscribed auction that raised only 48.03% (Rs. 67.24 Bn) of its offer, where 91-day and 182-day weighted averages rose slightly to 8.18% and 8.25%. • Treasury Bond Auction: Rs. 240.00 Bn is scheduled for May 27 across three maturities: 2030 (Rs. 90 Bn), 2033 (Rs. 70 Bn), and 2035 (Rs. 80 Bn). • Liquidity & Forex Indicators: • Money market net liquidity surplus stood at Rs. 136.99 Bn. Overnight call money and repo weighted average rates settled at 7.94% and 8.00% respectively. • The spot USD/LKR rate appreciated sharply to close at Rs. 325.50/327.00, compared to the previous close of Rs. 329.00/335.00. Total traded volume reached US$ 92.62 Mn on May 22.