ECONOMYNEXT – Sri Lanka Treasury bond yields were down around 100 basis points on Tuesday and T- bill rates were down on active trade, after the President Ranil Wickremesinghe’s comments last week on local debt restructuring, dealers said.
“Even though there is a small delay the market is reacting to that,” a dealer said.
“We are trying to avoid damage to the domestic structure but everyone will have to take a fair share,” President Wickremesinghe was quoted as saying on Sri Lanka’s Daily FT newspaper.
“So far, we have only looked at the foreign and as far as the local debt is concerned, we are working to minimise the impact. There is no need to panic. If all the taxes come in, we will be able to avoid it completely.”
According to some bond market players, interest rates will fall close to 20 percent if there was no domestic debt restructuring.
State Minister Shehan Semasinghe said a decision on domestic debt re-structure will be made after getting financial assurances from bilateral creditors.
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Bond yields started to go up and investors stopped buying long term bond after President Wickremesinghe said financial advisors were looking at domestic debt re-structuring.
A bond maturing on 15.01.2028 ended at 30.75/31.00 percent on Tuesday, down from 31.75/32.00 percent on Monday.
A bond maturing on 01.07.2032 closed at 29.00/30 percent on Tuesday, down from 30.10/90 percent.
A bond maturing on 01.07.2025 closed at 31.00/20 percent on Tuesday, down from 32.00/30 percent from the last close.
The three-month T-bills closed at 32.00/30 percent doon from the previous close of 32.75/33.00 percent.
The Central Bank’s guidance peg for interbank transactions remained unchanged at 363.50 rupees against the US dollar.
Commercial banks offered dollars for telegraphic transfers between 372.00 and 372.10 for small transactions, data showed.
Buying rates are between 362.00 – 362.10 rupees. (Colombo/Nov 22/2022)