Bond rates in the secondary market reflected a gradual reduction in line with the monetary easing strategy adopted by CBSL. But cash trapped government was required to settle bond liabilities falling due on 1st September amounted close to LKR 220Bn. The primary bond auction rates remained relatively uncharted compared with the rates of the last bond auction in July, before the SRR cut.
Secondary market bond yields were also elevated causing higher borrowing costs for the government. Further, CBSL pulled back from issuing longer tenor bonds at primary auction as the cost is too high for caring longer period.