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Sri Lanka bond auction yields follow secondary market

ECONOMYNEXT – Sri Lanka’s bond yields rose across maturities Friday with the 20 year bonds maturing on 15.03.2035 rising 59 basis points to 11.45 percent from December 15, data from the state debt office showed.

20-year bonds were auctioned at 10.86 percent on December 15.

15-year bonds maturing on 15.05.2030 were sold at 11.00 percent, up 67 basis points from 10.33 percent on October 30.

5-year bonds maturing on 15-12-2020 were sold at 9.56 percent. Bids for 5-year bonds were rejected on December 15. But a close maturity 01.05.2020 were sold at 8.99 percent on October 30, indicating a rise of 57 basis points.

The government sold 2.93 billion rupees of 20-year bonds, 2.86 billion of 15-year bonds and 1.3 billion rupees of 5-year bonds.

Secondary market yields have started to pick up since the Central Bank ended large scale monetization over recent weeks, ending excessively loose policy.

When yields rise, bond prices fall and when yields fall, the price of the bond goes up.

Auction bond yields have risen before, and then through money printing as well as through gaps between auctions yields have come down with state managed funds also buying at low yields (high prices) after secondary yields fell, allowing dealers to make large profits, market watchers say. (Colombo/Dec19/2015)

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