Central Bank rejects 3-year bond auction again

May 23 2006 (LBO) – Sri Lanka’s Central Bank, Tuesday rejected all bids sent in for the three-year bond auction for the second successive week, but did not give any reason. A fortnight ago, the bank sold three-year yields 10.87 percent, higher than 10.85 percent sold at the previous auction.

Market players said that the bank was expecting bids lower than 11.00 percent, which may have been the reason to call the auction off.

The bank, which conducts auctions on behalf of the treasury, offered a billion rupees worth of paper but said it received offers worth 1,215 million rupees for the issue, which carried a coupon rate of 7.5 percent.

Three-year paper currently trades at around 11.28 percent in the secondary market.