Sri Lanka Treasuries yields shoot up

COLOMBO (EconomyNext) – Sri Lanka’s Treasury bill yields rose soared across maturities at Tuesday’s auction with the 3-month yield rocketing 91 basis points 6.89 percent in one of the biggest one-day gains seen in the country’s Treasuries markets.

The 6-month yield rose 80 basis points to 6.98 percent and the 12-month yield rose 86 basis points to 6.99 percent.

Yields rose as bond market participants bid higher after being panicked by a sharp rise in 30-year bonds Friday after the state debt office accepted bids of 10 billion rupees, 900 percent more than the offered amount, sending yields up by around 200 basis points.

The central bank also effectively tightened monetary policy Friday by ending a practice where banks were forced to deposit excess cash at 5.0 percent at the central bank below its official flow rate of 6.50 percent.

Sri Lanka’s bond markets had been virtually dead for two days with hardly any trading and wide quotes since Friday’s auction shock.

The debt office, which is a unit of sold 7.6 billion rupees of 3-month bills, 1.2 billion rupees of 6-month bills and 7.6 billion rupees of 12-month bills.

Update II