Sri Lanka sovereign yields ease after bond repayment, IMF statement

ECONOMYNEXT – Sri Lanka’s bond yields have fallen sharply the repayment of a billion US dollar that matured on January 14 and the subsequent announcement by the International Monetary Fund that it would start talks on resuming a bailout program, dealers said.

Sri Lanka’s sovereign bond yields soared after a President Maithripala Sirisena triggered a political crisis by appointing Mahinda Rajapaksa as Prime Minister and later dissolved parliament illegally.

On January 14 Sri Lanka repaid a billion US dollar bond, using forex reserves, keeping up its record of not defaulting on a bond, Finance Minister Mangala Mangala Samaraweera said.

The IMF said earlier this week that it will resume talks on resuming a program in February.

Yields of most Sri Lanka sovereign bonds are now close to levels before the crisis hit on October 26 and raging agencies downgraded Sri Lanka by a notch.

A 500 million dollar bond maturing in April 2019 which spiked to around 8 percent during the constitutional crisis was quoted at around almost 7 percent during the first week of January.

The bond is now below 5 percent based on the mid price of the bid and offer prices according to data reported on Bloomberg Newswires.

A 2022 bond which was quoted at over 8.5 percent during the height of crisis and which well to around 7.7 percent in the first week of January had now fallen to around 7 percent. (Colombo/Jan18/2018)

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