ECONOMYNEXT – Sri Lanka’s 06 and 12 month Treasuries yields rose up to 09 basis points at Wednesday’s auction, with 21.9 billion rupees of bills being sold, the state debt office said, while market bond yields also edged up.
In the secondary market, bond yields edged up after the auction.
The 12-month yield rose 09 basis points to 6.63 percent, with 3.39 billion rupees of bids being accepted.
The 6-month yield also rose 7 basis points to 6.57 percent with 18.5 billion rupee of bids being accepted.
Three months bills were not offered. Bill yields also rose at the last auction, where three month securities were not sold.
Sri Lanka ratcheted up spending in a January 2015 budget and has been borrowing heavily in domestic market. Rates were kept down by the Central Bank by releasing liquidity generating foreign reserve losses, up to end May.
After June the Central Banka has also purchased some Treasury bills either to print money outright or to accommodate foreign debt repayments. However about 20 billion rupees of such bills were then sold down.
Auctioning of securities, which may raise rates communicates rates to the market faster and signals the market to generate more savings and reduce consumption. It may also reduce the severity of balance of payments crises, and avoid very ‘hard landings’ that occure when rates are suddenly raised.
Bond yields also edged up after the auction.
Two year bonds (15.05.2017) were quoted at 7.08/20 percent, dealers said up from 7.06/12 percent.
Three year bonds (01.06.2018) were quoted at 7.80/90 percent, up from 7.80/83 percent
Four year bonds (01.07.2019) were quoted at 8.15/25 percent, up from 8.12/18 percent.
Five year bonds (01.05.2020) were quoted at 8.38/44 percent, up from 8.36/40 percent.
Six year bonds (01.08.2021) were quoted at 8.91/94 percent, up from 8.88/92 percent.
Seven year bond (01.10.2022) were quoted at 9.10/16 percent, up from 9.08/10 percent.
Eight year bonds (01.09.2023) were quoted at 9.27/34 percent up from 9.24/28 percent.
10 year bonds (01.08.2015) were quoted at 9.62/67 percent up from 9.58/62 percent.
30 year bonds (01.03.2045) were quoted at 10.40/11.00 percent.