Sri Lanka’s treasury bond yields up 1%

October 30, 2006 (LBO) – Sri Lanka’s borrowing costs went up by 1-percent at this week’s bond auction, reflecting market sentiment for higher yields. The Central Bank sold a small quantity of three, four and five-year treasury bonds on Monday at yields higher than the previous auction.

 


Treasury Bond Auctions


3-years

4-years

5-years
Date of Maturity 01-11-2009 01-11-2010 15-10-2011
Coupon Rate 7.60% 7.20% 7.00%
Amount Offered (LKR) 2,000 2,000 2,000
Bids Received
(LKR)
2,205 2,210 2,235
Amount Accepted (LKR) 100 100 100
Weighted Average Yield 12.16% 12.25% 12.36%
Date of Settlement 01-11-2006 01-11-2006 01-11-2006
(Source:
Central Bank)

Yields for three-year bonds were up 1 percent to 12.16 percent, while four and five-year treasuries went up by the same to 12.25 percent and 12.36 percent respectively.

Yields for three-year bonds in the secondary market are now trading at 13.00 percent amidst thin trade, while there have been no takers for four and five-year maturities.

“The fact that the Central Bank accepted only 100 million rupees from each issue shows they are not happy with what the market had bid,” said one trader. Treasury bond yields have been climbing steadily in line with market expectations of a high interest rate outlook amidst rising inflation and heavy military expenditure.