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Thursday April 18th, 2024

Sri Lanka’s shares gain on a 69 week high on DDO

ECONOMYNEXT – Sri Lanka stocks closed up Wednesday after domestic bond restructuring assurances, policy rates were cut and inflationary pressure is likely to reduce, driving investor sentiment, brokers said.

The All Share Price Index edged up 1.69 percent or 174.56 points to 10,489.98,this is the highest the market has been since March 23 2022, while the most liquid index S&P SL20 was down 1.90 percent or 57 points to 3,060.50, according to exchange provisional data. 

The market generated a turnover of 3 billion rupees, majority of the revenue had come from the capital goods sector brining in 736 million rupees while the food, beverage and tobacco sector brought in 559 million rupees and diversified financials brought in 346 million rupees. The daily average turnover is 1.5 billion rupees.

The market generated a net foreign inflow of 24 million rupees.

Top gainers were Sampath Bank, LOLC and Commercial Bank.

In the last few sessions, the banking sector saw some selling interest and profit taking due to continuous gains.

Sri Lanka’s central bank said it had cut policy interest rates 200 basis points 12.00 percent and 11.00 percent, in July monetary policy meeting asking banks to lower lending rates.

Sri Lanka’s inflation in June 2023 slowed to 12 percent from 25.2 percent in May 2023 data from the state statistics office showed as the central bank operated deflationary monetary policy.

Nandalal Weerasinghe, Central Bank Governor said inflation would be lowered to a singular digit in the next month.Sri Lanka has made the offer to re-structure domestic as part of efforts to meet International Monetary Fund targets to make government debt sustainable after sovereign default.

Sri Lanka is offering to swap debt in provident funds for new instruments with a longer duration in line with an Extended Fund Facility (EFF) of the IMF.

Sri Lanka’s government continues to defend its domestic debt optimisation (DDO) programme against opposition criticism, noting that the banking system remains intact and assuring superannuation fund holders that their savings are safe.
There is no talk of a cut. It’s just a maturity extension,” Siyambalapitiya said.The state minister said the island nation is looking to restructure 17 billion of its total external debt. Sri Lanka’s total debt is estimated to be around 83.6 billion dollars, the domestic component of which is about 42.Out of this 42 billion dollars, Siyambalapitiya said, nine billion will be restructured. (Colombo/July10/2023)

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Sri Lanka’s discussions with bondholders constructive: State finance minister

ECONOMYNEXT – Sri Lankan authorities continue to engage all debt restructuring negotiations in good faith, within principles of equitable treatment among creditors, and with maximum transparency within the norms of such negotiations, State Minister of Finance, Shehan Semasinghe has said.

“It is standard practice, when a representative group of bondholders is formed, to entertain confidential discussions with such group and its appointed advisors. In the case of Sri Lanka, the Ad Hoc Group of Bondholders represents holders controlling more than 50% of the bonds, which make them a privileged interlocutor for Sri Lanka,” Semasinghe said on X (twitter).

“It is well understood that given the price sensitive nature of the negotiations, and according to market regulations, discussions with the Group and its advisors are to be conducted under non-disclosure agreements. This evidently restricts the ability of the Government to unilaterally report about the substance of the discussions.

“The cleansing statement, which was issued on the 16th of April, at the conclusion of this first round of confidential discussions with members of the Group, aims at informing the Sri Lankan people, market participants and other stakeholders to this debt restructuring exercise, about the progress in negotiations. It provides the highest possible level of transparency within the internationally accepted practices in such circumstances.

“As informed in this statement, confidential discussions held in recent weeks with bondholders’ representatives proved constructive, building on the restructuring proposals presented by both parties. During the talks both sides successfully bridged a number of technical issues enabling important progress to be made. Sri Lanka articulated key remaining concerns that need to be addressed in a satisfactory manner.

“The next steps would entail further consultation with the IMF staff regarding assessments of the compatibility of the latest proposals with program parameters. Following these consultations, we hope to continue discussions with the bondholders with a view to reaching common ground ahead of the IMF board consideration of the second review of Sri Lanka’s EFF program.”

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Sri Lanka rupee weakens at 301.00/302.05 to the US dollar

ECONOMYNEXT – Sri Lanka’s rupee closed at 301.00/302.05 to the US dollar in the spot forex market on Tuesday, from 299.00/10 on Tuesday, dealers said. Bond yields were broadly steady.

A bond maturing on 15.12.2026 closed stable at 11.30/35 percent.

A bond maturing on 15.09.2027 closed at 11.90/12.05 percent up from 11.95/12.00 percent.

A bond maturing on 15.12.2028 closed at 12.10/20 percent down from 12.10/15 percent.

A bond maturing on 15.07.2029 closed at 12.25/40 percent.

A bond maturing on 15.03.2031 closed at 12.30/50 percent. (Colombo/Apr17/2024)

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Sri Lanka Treasury Bill yields down across maturities

ECONOMYNEXT – Sri Lanka’s Treasuries yields were down across maturities at Wednesday’s auction with the 3-month yield moving down 7 basis points to 10.03 percent, data from the state debt office showed.

The debt office sold all 30 billion rupees of 3-month bills offered.

The 6-month yield fell 5 basis points to 10.22 percent, with 25 billion rupees of bills offered and 29.98 billion rupees sold.

The 12-month yield dropped 4 basis points to 10.23 percent with 18.01 billion rupees of bills sold after offering 23 billion rupees. (Colombo/Apr17/2024)

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