Sri Lanka Treasuries yields up

Nov 16, 2011 (LBO) – Sri Lanka’s 3 and 6 month Treasuries yields rose at Wednesday’s auction and all bids for 12 months bills were rejected, data from the state debt office showed. Three month bills rose 12 basis points to 7.51 percent, 6-month bills rose 9 basis points to 7.54 percent. Last week 12-month bills were sold at 7.59 percent.

The government sold 3.0 billion rupees in 3-month bills, 1.0 billion in six month bills and rejected all bids for 12-month bills.

Dealers say money in rejected bills moves completely out of the Treasuries market into banks and finance companies as has happened in earlier episodes of peg defence.

Balance sheets of many banks show that they have been cutting their Treasuries holdings and growing their loan books. Banks have also started to increase their deposit rates.

One year deposits are now yielding around 10 percent and on year commercial paper around 12 to 14 percent depending on the risk rating.