Sri Lanka bond auction yields soar; 5-year up 97bp

ECONOMYNEXT – Sri Lanka’s 5, 6 and 11 year bonds yields rose sharply at Tuesday’s auction, with 2020 bonds rising 97 basis points to 9.35 percent from the last auction on August 11, data from the state debt office show.

The debt office sold 5.5 billion rupees of the bond maturing on 01.05.2020.

The average yield of a six year bond maturing on 01.08.2021 rose 64 basis points to 9.71 percent up from the last auction on August 04 at 9.07 percent. A total of 1.755 billion rupees of the bond was sold.

The debt office also sold 24.063 billion rupees of a bond maturing on 01.06.2026 to yield 10.34 percent.

There was no recent auctions of the same maturity but bond maturing on 01.09.2025 were auctioned on August 25 for 9.97 percent.

Bond yields have tended to rise higher when there is a large rollover, with the Central Bank saying that all bonds will be auctioned from this year, but then eases. However with state spending racheted up in January with a revised budget, Sri Lanka’s doemstic credit has risen requiring higher interest rates to keep the economy in equilibrium.

On September 01, about 79.5 billion rupees of bonds and 15 billion rupees of coupons are due, dealers said. The debt office raised a total of 31.31 billion rupees of bonds from this auction.

On August 25, another 30 billion rupees of bonds were sold to be settled on September 01. (Colombo/Aug31/2015 – Update II)

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