Secondary Bond market yields close up on shorter tenors

THE secondary Bond market opened last week on a strong footing, buoyed by S&P Global Ratings’ upgrade of Sri Lanka’s sovereign credit rating to CCC+ from Selective Default (SD) with a stable outlook. This spurred a notable pickup in activity and volumes on Monday, with demand concentrated in the 2029-2033 maturities, which saw yields edge lower.

- By WEALTH Trust SECURITIES

Momentum tapered off thereafter, with trading largely confined to narrow ranges ahead of the monetary policy announcement. On Wednesday, the Central Bank of Sri Lanka delivered its fifth policy review of the year, holding the Overnight Policy Rate steady at 7.75%. As the decision was widely anticipated and priced in, yields remained stable, and activity stayed subdued through midweek, with markets consolidating.

However, on Friday, shorter tenors such as the 2026-2028 maturities came under selling pressure, while renewed buying interest was noted on the 2030 tenor, which saw its yield edge down marginally. Overall, trading volumes were healthy at both ends of the week, while midweek conditions were quiet. The yield curve closed up on the very short end but broadly steady along the rest of the curve resulting in a slight flattening.