By First Capital Research

The secondary market yield curve edged higher across the board, as political uncertainty lingered and investors adopted a cautious approach ahead of today’s largest bond auction, totalling Rs.290.0 billion. As a result, the secondary bond market experienced heightened caution, with limited activity following the Treasury bill auction results.

Amidst thin trading volumes, the short end of the curve saw the 15.09.27 trade at 12.75 percent, while on the mid-end, 15.02.28, 01.07.28 and 15.12.28 bonds changed hands at 13.30 percent, 13.50 percent and 13.75 percent, respectively. At the T-bill auction held yesterday, the Central Bank offered Rs.180.0 billion but accepted only Rs.164.8 billion, amounting to 91.5 percent of the total offer. Of the accepted bids, 64.2 percent were for the three-month Treasury bill. 

Meanwhile, the weighted average yields continued their upward trend across all maturities, with the three-month bill seeing a significant rise of 38 basis points (bps) to reach 9.99 percent. The six-month bill also increased by 30 bps, closing above the 10 percent mark at 10.24 percent. However, the one-year bill saw only a slight increase of 4 bps, ending at 10.07 percent. While the three-month bill was oversubscribed due to high demand, the six-month and one-year bills were undersubscribed, with the one-year bill attracting minimal interest, leading to the acceptance of only Rs.1.1 billion. On the external side, the Sri Lankan rupee further depreciated against the greenback, closing at Rs.300.7.