Secondary Bond market sees demand on the long end

■ Rs. 80 b T-Bond auction fully subscribed; demand spills over to DIW ■ Rupee depreciates

- BY WEALTH TRUST SECURITAS

THE secondary Bond market last week started off and maintained a broadly positive tone throughout the week, supported initially by strong bullish momentum and the announcement of a $ 100 million ADB financing package aimed at strengthening Sri Lanka's macroeconomic stability.

Early in the week, robust buying interest drove yields lower across the curve, particularly in the 2028-2033 maturities. As the week progressed, yields largely consolidated at these lower levels, with activity and transaction volumes remaining healthy. Subsequently, market sentiment shifted to a cautious, wait-and-see mode ahead of back-to-back Treasury Bill and Bond auctions, resulting in mostly sideways trading within narrow bands.

Mid-to late-week trading saw yields fluctuate modestly, with brief upward adjustments followed by renewed interest. By Friday, the market experienced selling pressure as profit-taking kicked in, which caused short-end yields to edge up to close the week steady.

However, the longer end of the yield curve (2030 tenors and beyond) closed notably lower week-on-week. This resulted in a flattening of the yield curve and a downward shift on the long end. This showcased increased appetite for longer tenors among market participants.