Market yearns further clarity despite ISB rework

By First Capital Research 

The secondary market pivoted from its selling sentiment displayed during the previous sessions, and witnessed a considerable amount of bids recorded during the day as Sri Lanka reached a provisional deal on USD 12.5bn worth of ISBs’ with the respective bond holders. 

Moreover, limited trades were recorded during the day justifying the limited activity as the investors yearned for further clarity on the market sentiment and impact. 

Furthermore, liquid tenors 2028 and 2029 enticed trades as 15.02.28, 15.03.28 and 01.05.28 maturities traded at 11.85% and 15.09.29 traded at 12.00%. 

The restructuring of bonds was one of the key conditions set by the IMF under a USD 2.9bn bailout programme that helped Sri Lanka tame inflation, stabilise its currency, and improve public finances. The framework proposes a 28% haircut on face value and 11% reduction on past interest with payments on the interest component to start from September. 

Meanwhile, overnight liquidity improved to Rs. 120.8bn from Rs. 95.4bn recorded during the previous day whilst, CBSL holdings remained stagnant for the 5th consecutive day. On the external side LKR slightly depreciated against the USD recording at Rs. 304.1 during the day.