Sri Lanka Treasuries yields fall across maturities on IMF loan

Minister appoints Dr Swaminathan to IPACSL as Chairperson

July 22, 2009 (LBO) – Sri Lanka’s Treasuries fell across maturities at Wednesday’s auction with the 3-month yield falling 26 basis points to 10.79 percent, the government’s debt office said. In the first four months of the year, Sri Lanka had already run a 4.0 percent of GDP deficit, putting the country on a path to a 12.0 percent GDP deficit, unless corrective action was taken.

Corrected The 6-month yield fell 30 basis points to 11.63 percent and the 12-month yield fell 23 basis points to 12.09 percent, two days after the International Monetary Fund said it would give the country a 2.5 billion US dollar loan.

The debt office, which is a unit of the central bank said it sold 12.2 billion rupees of bills. About 10.5 billion rupees of bills matured.

Secondary market bond yields also dropped.

A 4-year bond maturing on 01.02.2013 traded at around 12.60/70 percent, down from yesterday’s 12.85/95 levels, dealer said.

Yields are falling on expectations of a flood of foreign money that will relieve pressure on rates.

The average 3-month auction yield fell below the central bank’s 11.00 percent reverse repo rate today.

Central Bank Governor Nivard Cabraal said under an IMF backed plan Sri Lanka was hoping to keep the budget deficit at 7.0 percent of gross domestic product.