Counting Chickens?

State-run Bank of Ceylon is negotiating with the Treasury to re-price Rs. 9.3 billion worth of government bonds which come up for renewal next year. State-run Bank of Ceylon is negotiating with the Treasury to re-price Rs. 9.3 billion worth of government bonds which come up for renewal next year. The fixed rate bonds were issued to Bank of Ceylon (BOC) by the Treasury in 1993 and 1996, as a method of recapitalising the bank.

Portion of these bonds; Rs. 9.3 billion falls due in 15 months, the balance; Rs. 8.5 billion matures in 18 years, Fitch Ratings Lanka said in a report issued Friday.

“These bonds provided the bank with attractive spreads in the low interest rate environment, but carry high market risk given that they are non tradable, are of long tenures and carry fixed coupons,” Fitch said while re-affirming the bank’s AA (sri) status.

With interest rates on the rise, the bank is negotiating for a floating rate tradable bond which gives it greater flexibility to manage market risks.

Meanwhile, the bank has also stepped up lending to state corporations and government enterprises now account for 37 percent of Rs. 57 billion of i