Sri Lanka bonds yields below 10-pct ahead of maturity

Jan 09, 2012 (LBO) – Sri Lanka’s bond yield held below 10 percent for two to four years bonds ahead of a 50 billion tranche of long term government securities maturing on January 15, dealers said. A 01 March 2014 was quoted around 9.30/40 percent, a July 15, 2015 bond was quoted around 9.40/47 and an August 01, 2015 bond was quoted around 9.55/65 percent, dealers said.

Sri Lanka’s bond yields which rose steadily over the past quarter fell from highs above 10 percent last week following an annual monetary policy roadmap by the central bank and moral suasion.

At the weekly Treasury bill auction, rates were also held flat. Though auctions of Treasury bills which have tenures below one year, there have been no bond auctions for some time.

On January 15, a stock of 51.5 billion rupees in government bonds are maturing, dealers said.

Sri Lanka’s interest rates have been rising since active sterilized interventions began in foreign exchange markets in August.

Rates rise when sterilizations of foreign exchange interventions are slightly less than 100 percent. But all liquidity injections to sterilize interventions results in equivalent reserve losses in the future.

From August Sri Lanka has lost about a quarter of its foreign reserves to defend a dollar peg.