Sri Lanka’s treasury bill rates move up by 5-basis points

August 8, 2006 (LBO) – Sri Lanka’s borrowing costs moved up on average by 5-basis points, when the Central Bank sold 8.3 billion rupees in treasury bills on Tuesday. Yields for three month notes rose 5-basis points to 10.38 percent, six month treasuries gained 4-basis points to 10.53 percent, while one year bills gained 5-basis points to 10.60 percent, the Central Bank said.


Maturity

Bids received

Amount accepted

Weighted avg. yield

(Rs. mn)

(Rs. mn)

This week

Last week
Three months 8,656 5,681 10.38 10.33
Six months 4,398 1,105 10.53 10.49
One-year 4,524 1,514 10.60 10.55
Total

17,578

8,300

10.45

10.38
(Source:
Central Bank)

The bank offered 10.758 billion rupees to the market by way of re-issues, and bought 2.458 billion worth of bills for their own stock.

The yields were in line with market expectations, though traders said the bank may have cut off higher bids in a bid to contain borrowing costs.

Sri Lanka’s borrowing costs have been creeping up stealthily as fierce fighting between government troops and Tamil Tiger rebels in the recent weeks has renewed fears that the island was slipping back to civil war.

Dealers are expecting the bank to revise its policy rates on August 16, by at least 25 basis points for the third consecutive time this year.

Policy rates were last revised in July by 12.5 basis points, as the bank looked for ways to curb inflation led by higher oil prices. The repurchase rate, which drains money from the banking system, now stands at 9.125 percent, while the reverse repurchase rate is at 10.625 percent.