Yield curve edges down amidst post-auction buying

By First Capital Research

At yesterday’s Rs.95.0 billion worth bond auction, the total offered was fully accepted from each maturity with the 15.03.2028 bond closing at a weighted average yield rate of 11.79 percent amidst higher reception. 

Meanwhile, the 01.10.2032 bond closed at 12.36 percent at the end of yesterday’s auction. Post auction, strong bullish interest emerged in the secondary market, resulting in a downward shift in the yield curve. The mid tenures attracted larger interest during the day, resulting in a 10-15bps decline in yields. Accordingly, on the liquid tenures, 15.12.2027 closed trades at 11.30 percent while 15.02.2028 and yesterday’s auction bond. 15.03.2028 closed deals at 11.55 percent. 01.05.2028 and 01.07.2028 registered transactions at the 11.65 percent level. Moreover, 15.12.2028 recorded transactions at 11.75 percent and 15.09.2029 recorded transactions at 11.85 percent at the end of the trading day.

On the external side, the rupee exhibited a mixed trend against the major currencies. Accordingly, the Sri Lankan rupee slightly depreciated against the US dollar and AUD compared to the previous day, closing at Rs.293.1/US dollar and Rs.197.6/AUD, respectively. However, the rupee registered an appreciation against the other currencies namely, GBP and EUR. Meanwhile, at the end of the day, overnight liquidity closed at Rs.141.83 billion while the Central Bank holdings remained steady at Rs.2,515.62 billion.