Sri Lanka Treasuries yields up, Rs28bn sold

ECONOMYNEXT – Sri Lanka’s 12-month Treasuries yield rose 08 basis points to 7.95 percent at Wednesday’s auction, the state debt office said, with data indicating that a successful auction may have been held.

The 6-month yield rose 17 basis points to 7.57 percent. Three month bills were not offered.

The debt office sold 28.04 billion rupees of bills made up of23.5 billion rupees in 6-month bills and 4.5 billion rupees of 12-month bills.

There is an estimated 28 billion rupees of maturing bills this week, indicating that this week’s auction may have been successful after a long series of failures, where large volumes of money was printed week after week injecting liquidity to the banking system.

However it is not known whether the central bank purchased bill over and above maturing bills. Data of central bank purchases at auctions are no longer made to the public at the close of the auction.

In the mid-1990s, auctions of Treasury bills and bonds were started to stop central bank credit (printing money) and end financial repression and currency collapse.

Central bank credit used to finance the budget deficit and keep interest rates down was identified as the core problem with Sri Lanka’s economy as far back as 1966 in a report by Indian economist B R Shenoy. (Colombo/Feb10/2016)


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