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Sri Lanka rupee steady, gilt yields marginally up

ECONOMYNEXT – Sri Lanka rupee quoted stable at 185.05/10 to the US dollar on Wednesday while bond yields marginally up, dealers said.

The rupee closed at 185.10/20 levels on Tuesday.

Moody’s Investors Service has downgraded the long-term foreign currency deposit ratings of Bank of Ceylon (BOC), Hatton National Bank PLC (HNB) and Sampath Bank PLC (Sampath) to Caa1 from B3, and the banks’ long-term local currency deposit ratings to Caa1 from B2.

At the same time, Moody’s has downgraded the Baseline Credit Assessment (BCA) of BOC to caa1 from b3, and those of HNB and Sampath to caa1 from b2.

The rating outlooks, where applicable, are stable.

The rating ageny said it downgraded the three banks because they have significant credit exposure to the sovereign through their holdings of government securities and lending to the domestic economy, “which is itself correlated to sovereign creditworthiness”.

“Moody’s expects the banks’ asset quality to worsen significantly as a result of coronavirus disruptions, although the increase in problem loans will not be evident until 2021 because of regulatory forbearance measures, including a moratorium on loan repayments.”

In the secondary securities market, bond yields traded marginally up in moderate market trade, dealers said.

A 2-year bond maturing on 15.12.2022 was quoted at 5.80/6.00 per cent on Wednesday, up from 5.75/90 per cent at Tuesday’s closing.

A bond maturing on 15.01.2023 was quoted at 5.90/6.00 per cent, gaining from 5.80/95 per cent at yesterday’s close.

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A bond maturing on 15.09.2024 was quoted flat at 6.42/50 per cent on Wednesday.

A bond maturing on 01.05.2025 was quoted at 6.70/78 per cent, up from 6.68/78 per cent.

A bond maturing on 01.02.2026 was quoted at 6.90/7.00 per cent, gaining from 6.87/97 per cent at previous day’s end.

A bond maturing on 15.08.2027 was quoted at 7.05/25 per cent, stable from 7.05/15 per cent.

A bond maturing on 01.07.2028 was quoted at 7.20/50 per cent, stable from 7.20/7.40 on Tuesday.

A 10-year bond maturing on 15.05.2030 was quoted at 7.40/80 per cent on Wednesday, stable from 7.40/60 per cent at Tuesday’s end.
(Colombo/Sep30/2020)

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