Sri Lanka sells long bonds

Jan 30, 2012 (LBO) – Sri Lanka has sold 10-year bonds to yield 10.25 percent and 20-year bonds to yield 11.0 percent at an auction Monday, the state debt office said. The debt office said 1,000 million rupees of 2022 bonds and 1,026 million rupees of 2032 bonds were sold.

Dealers said a 20-year bonds was offered in the market at around 13.00 percent earlier in the month.

Long bonds are usually sold to so-called captive sources, including retirement funds of citizens working in the private sector which are managed by state workers. In the past it was the practice to sell securities at rates below inflation to the pension funds.

Now however the Central Bank has kept inflation lower with better monetary policy.

Sri Lanka’s debt office, which is a unit of the Central Bank resumed bond auctions after a long gap on January 13.

On January 13, a bond maturing on February 2012 (2-years) was sold to yield 9.45 percent, an April 2016 bond (4-years) was sold at 9.55 percent and a July 2018 bond was sold to yield 9.75 percent.

In the secondary market Monday, a bond maturing in March 2014 was quoted around 9.75/82 percent and a bond maturing in March 2015 was quoted around 9.95/9.99 percent, dealers said.