Auction yields continue to decline for 8th consecutive week

By First Capital Research

The secondary market witnessed buying sentiment throughout the day, largely centred on the shorter and belly end of the curve. 
Thus, trades were observed on the 2026 maturity, with 15.05.26, 01.06.26, 01.08.26 and 15.12.26 trading between 9.93 percent and 9.70 percent. 
Furthermore, a steep decline in yields was also observed at the Rs.160.0 billion Treasury bill auction held yesterday, with yields dropping by more than 10 basis points (bps) across the board and continue to hover below the 10 percent mark. 

The Rs.160.0 billion auction conducted yesterday was fully subscribed with the Central Bank raising Rs.30.0 billion from the three-month bill at 8.62 percent (-14bps week-on-week (WoW)), Rs.50.0 billion from the six-month bill at 9.04 percent (-13bps WoW) and raising Rs.80.0 billion from the 364-day bill, at 9.18 percent (-11bps WoW). 
Meanwhile, post-auction selective interest was visible on the tail end of the curve, with 15.09.27 trading between 10.55 percent and 10.35 percent, whilst the 2028 maturities, including 15.03.28, 01.05.28 and 01.07.28 maturities, trading between 10.90 percent and 10.70 percent. 
Furthermore, few trades were also enticed on the 01.10.32 maturity, trading at 11.85 percent. 
Meanwhile, on the external front, the Sri Lankan rupee continued to remain volatile and depreciated for the fourth straight session and recorded at Rs.301.27/dollar.