“IMF triumph fuels bullish surge; Optimism on the rise”

The secondary market yield curve exhibited a slight decline over the week amidst looming bullish interest while the IMF approval for the 2nd tranche further boosted buying appetite among investors. Meanwhile, yields at the weekly T-Bill auction continued to taper down across the board for the third consecutive week.

Market opened the week on a bullish note with investor interest centered from short to mid tenors. However, by mid-week a mixed sentiment surfaced ahead of primary market auctions First Capital Research said.

Nevertheless, buying appetite remained strong post auctions while securing the IMF approval for the 2nd tranche of the EFF further bolstered buying interest. Consequently,, two-way quotes on the short end declined by 10-20bps, while mid tenors budged down by 05-25bps with the largest declines observed on 2025 and 2026 maturities over the week.

Meanwhile, CBSL conducted its first bond auction for the month of December expecting to raise LKR 160 Bn. However, CBSL fully rejected the bids for 15.03.2031, whilst 01.08.2026 and 15.12.2028 were accepted at a WAYR of 14.07% and 14.32%, respectively.

Moreover, CBSL conducted its weekly T-Bill auction where only LKR 216.Bn was accepted out of LKR 220.Bn offered. Accordingly, weighted average yield rates nudged down across the board with 03M closing at 14.59% (-8bps), 06M closing at 14.29% (-9pbs) whilst 01Yr registering at 12.83% (-5bps).

In the Forex market, LKR slightly appreciated against the USD with rupee being recorded at LKR 326.8 compared to LKR 327.1 recorded during the beginning of the week.

The Government Securities market has to settle a Treasury bill amounting to LKR 158.5Bn for the week ending December 22, 2023.

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