Sri Lanka bond yields up; sells three times offer in 2024 bonds

ECONOMYNEXT – Sri Lanka’s sold 6.6 billion rupees of 8-year bonds maturing on 01.01.2024 to yield 12.26 percent, up from 11.78 percent on February 29, data from the state debt office showed.

Four year bonds maturing on 01.05.2020 were sold to yield 11.87 percent, sharply higher than the 5-year, 5 month bonds sold at 11.42 percent two week ago.

The debt office, which is a unit of the central bank offered only 2.0 billion rupees of 2024 bonds, mis-directing the market and accepted 6.6 billion rupees of the bonds, a practice started before the current regime, but amplified in recent months, effectively rigging the auction, critics have said.

Some bonds sold at high yields by accepting higher than the offer were later dumped on the state managed funds by dealers.

On March 10, all bids at the bond auction were rejected. During balance of payments crisis, it is the practice of the central bank, which sells debt for the Treasury, to reject auctions and then accept bids at higher rates later. (Colombo/Mar17/2016)
 

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