Sri Lanka bond yields down over week, rupee weaker

ECONOMYNEXT – Sri Lanka’s bond yields has eased 30 to 40 basis points, from a week earlier, when a large volume of bonds were rolled over at two auctions, dealers said.

On June 01, over 64 billion rupees of maturing bonds and an estimated total of 87 billion rupees of coupons were rolled over.

In money markets, overnight call money was traded around 8.15 percent and gilt backed repos at 7.90/95 percent.

In the interbank market excess liquidity rose to 15.8 billion rupees from 9.4 billion rupees a day earlier.

The market has been plus cash, indicating that credit is slower compared to dollars inflows and deposits raised by banks, with deposit rates now higher than last year.

Rising liquidity (coming from dollar purchases) which is not mopped (sterilized) however could generate currency pressure once foreign reserve targets given under an forthcoming IMF program met, long term watchers of Sri Lanka’s monetary system say.

Net international reserve targets could be met without further currency depreciation if excess liquidity is sterilized by curbing domestic credit.

The rupee weakened to 147.90/148.00 to the US dollar after starting at 147.55/60 levels.

A selection of bond prices are given below:

2-year bond maturing 15.10.2018 quoted at 11.50/65 down from 11.83 auction May 26





4-year bond maturing 15.10.2021 quoted at 12.08/14 down from 12.48 on May 26

7-year bond maturing 01.10.2024 quoted at 12.30/40 down from 12.77 on May 26

10-year bond maturing 01.06.2026 at 12.45/55 auction average 12.98 May 26

14-year bond maturing on 15.05.2030 quoted at 12.50/80 last wed 12.90/13.000 last Wednesday. (Colombo/May30/2016)


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