Broad-based demand across the curve nudges yields down as the rupee firms and banking system liquidity tightens
Sri Lanka’s secondary bond market saw sustained buying interest on Friday, with strong investor participation and elevated trading volumes driving a modest downward shift in yields across much of the curve.
At the short end, the 15.09.2027 maturity traded at 9.70%, while the 01.05.2028 and 01.09.2028 papers changed hands between 10.00% and 10.10%. The 15.12.2029 maturity traded in a 10.25%-10.35% range. Activity in the 2030 segment saw the 01.03.2030 and 15.05.2030 papers trade between 10.35% and 10.45%, while the 01.08.2030 and 15.10.2030 maturities moved within a 10.45%-10.60% band.
Further along the curve, the 01.02.2031 paper traded between 10.55% and 10.65%, while 01.12.2031 traded higher at 10.80%. The 15.12.2032 maturity changed hands at 11.05%, and the 01.11.2033 paper traded between 11.30% and 11.45%. At the belly of the curve, the 15.10.2035 maturity moved between 11.52% and 11.65%, while the longer-dated 15.08.2036 paper traded between 11.80% and 11.88%.
Among the most actively discussed maturities, the 01.08.2030 and 15.10.2030 papers each moved 10 basis points lower, while the 01.02.2031 and 15.08.2036 maturities eased by 5 basis points — moves that remained within normal day-to-day trading ranges rather than signaling a sharp repricing.
On the currency front, the rupee appreciated against the US dollar, closing at LKR 328.61 compared to LKR 329.00 in the prior session. Liquidity in the banking system contracted to LKR 338.13 billion from LKR 347.87 billion previously, even as excess liquidity in the system has held in a relatively narrow range over recent weeks.
Business Impact
A broad, modest easing in yields — even one that stays within normal trading bands — points to sustained demand for government securities and can translate into marginally lower borrowing costs over time for issuers pricing off the sovereign curve. The rupee’s slight firming and tighter banking system liquidity are worth watching together, as reduced liquidity can influence short-term funding costs for banks and, by extension, corporate borrowers.
Key Numbers
| Metric | Value |
|---|---|
| 15.09.2027 Yield | 9.70% |
| 01.02.2031 Yield Range | 10.55% – 10.65% |
| 15.08.2036 Yield Range | 11.80% – 11.88% |
| USD/LKR | 328.61 (from 329.00) |
| Banking System Liquidity | LKR 338.13 billion (from LKR 347.87 billion) |
| Largest Popular Maturity Move | 01.08.2030 / 15.10.2030: -10 bps each |
Source Attribution
Source: Central Bank of Sri Lanka statistics and publicly available market information.