Sri Lanka bond auction yields fall amid stronger demand

COLOMBO (EconomyNext) – Sri Lanka’s auction bond yields eased in the market amid state and foreign bank demand with secondary market yields moving up after Thursday’s  auction, dealers said.

At the auction 4-year bonds maturing on 15.09.2019 was sold at a weighted average of 8.92 percent, with the government selling 19.24 billion rupees of bonds after calling bids for 10 billion rupees, sharply lower than the 9.13 percent weighted average on March 17.

The cut-off was believed to around 9.0 percent.

The bond fell as low as 8.40/50 percent before the auction and closed around 8.70/80 percent levels after the auction.

The debt office also sold 20.1 billion rupees of 8-year bonds maturing on 01.09.2023 at a weighted average yield of 9.73 percent, marginally below 9.79 percent at an auction of March 11, 2015.

The cut-off was believed to be around 9.85 percent.

The bond dropped as low as 9.30 percent before the auction, and closed around 9.65/75 percent after the auction.

There was demand from state banks as well as foreign names for the bonds, dealers said. Bill yields also fell at Wednesday’s auction, after many buyers missed bids at the previous auction.

The Central Bank has also not renewed term auctions, leading to high levels of excess liquidity. Economic analysts say change in domestic operations while giving lower rates, will lead to a faster run-down of foreign reserves.

The bonds were new and were not roll-overs, giving fresh money for the government to cover spending.






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