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Sri Lanka bond yields ease, rupee down

ECONOMYNEXT – Sri Lanka’s bond yields went down marginally Friday while the rupee closed around 191.50/192.25 in the one week forward market, amid sporadic activity dealers said.

There were sporadic rates around 191.75 to the US dollar and 190.00 to the US dollar in intra-day trade, dealers said.

Sri Lanka’s dollar bonds are trading at a steep discount to par among foreign investors. The central bank has made at least three ‘helicopter drop’ style liquidity injections over the past month, despite not having floating reserve currency and operating a non-credible peg.

The central bank then banned banks from buying dollar bonds and slapped import controls. In Sri Lanka due to strong belief in Mercantilism, there is belief that currency weakness is related to imports (trade) and no liquidity injections (money and credit).

Sri Lanka’s stock markets are closed due to a Coronavirus holiday.

In the secondary government securities market, yields edged down in moderate trading, dealers said.
Dealers also said that the 2022, 2024 and 2027 maturities were more liquid.

A bond maturing on 15.12.2021 was quoted at 8.00/8.20 percent down from 8.75/95 percent on Wednesday.

A 2-year bond maturing on 01.10.2022 was quoted at 8.70/80 percent down from 9.05/15 percent.
A bond maturing on 01.09.2023 was quoted at 8.95/9.00 percent up from 9.35/50 percent.

A bond maturing on 15.09.2024 was quoted at 9.10/15 down from 9.65/75 percent on Wednesday.

A bond maturing on 15.10.2027 was quoted at 09.45/50 percent down from 09.90/10.00 percent.
A bond maturing on 15.05.2030 was not quoted in early trade.

A bond maturing on 15.09.2034 was also not quoted. It closed at 10.00/40 percent in it’s last close.(Colombo/ Mar27/2020)

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