📈 Sri Lanka Bond Market Yields See-Saw Before Stabilizing; Rupee Remains Steady

• Secondary Bond Market Highlights • Yields experienced V-shaped volatility, initially rising due to global pressure before sharply falling after CBSL held policy rates unchanged. • Yield ranges across key tenors: - 2028s: 10.50% - 10.68% - 2030s: 11.00% - 11.35% - 2034s: 11.90% - 12.10% • Treasury Bill Auction & Foreign Inflows • T-Bill Yields: Extended gains for a 3rd straight week; 91-day up 5 bps to 9.25%, 182-day up 4 bps to 9.41%, and 364-day up 2 bps to 9.95%. • Issuance: PDMO successfully raised full Rs. 80.00 Bn target; total phase 1 & 2 aggregate subscription reached Rs. 88.00 Bn. • Foreign Holdings: Turned net positive with Rs. 1.82 Bn inflow (+1% WoW), raising total foreign holdings in Rupee Treasuries to Rs. 198.75 Bn. • Liquidity & Currency Market • Money Market Liquidity: Remained elevated at Rs. 360.11 Bn surplus (vs. Rs. 370.92 Bn prior week). • Call Money & Repo Rates: Averaged 8.99% and 9.04% respectively. • 📈 Sri Lanka Market Wrap: Bond Yields Volatile, T-Bill Rates Rise, Foreign Inflows Resume The secondary bond market experienced volatile "V-shaped" trading before closing lower-to-steady for the week ended 2 October. Initial pressure from global monetary tightening and crude oil risks was offset by the CBSL holding policy rates steady, moderating credit growth, and maintaining a 5% inflation target. • Government Securities & T-Bills: • T-Bill Yields: Rose for the 3rd straight week across all tenors: 91-day up 5 bps to 9.25%, 182-day up 4 bps to 9.41%, and 364-day up 2 bps to 9.95%. • Auction Performance: PDMO raised the full offered amount of Rs. 80 Bn (oversubscribed 2.51 times). Phase II raised an additional Rs. 8 Bn, bringing total T-Bill issuance to Rs. 88 Bn. • Bond Tenor Yields: 2028s traded between 10.50%-10.68%; 2030s-2031s hit intraweek highs of 11.28%-11.40% before cooling to 11.17%-11.27%; longer-dated 2034s-2035s hovered around 11.90%-12.15%. • Foreign Portfolio Flows: • Rupee Treasuries recorded a net foreign inflow of Rs. 1.82 Bn (+1% WoW) following two weeks of outflows, bringing total foreign holdings to Rs. 198.75 Bn. • Liquidity & Forex: • Money Market: System liquidity surplus remained high at Rs. 360.11 Bn (vs. Rs. 370.92 Bn prior week). Call money averaged 8.99%; Repo averaged 9.04%. • Currency: The USD/LKR rate held steady, closing at Rs. 330.59/330.64 against Rs. 330.40/330.50 the previous week. Daily average spot USD volume stood at US$ 107.42 Mn.