Sri Lanka rejects bids for 2025 bonds, some 2029 bonds sold
ECONOMYNEXT – Sri Lanka failed to sell 20 billion rupees of 2025 bonds at Wednesday’s auction with all bids rejected, but sold a part of the 2029 bonds offered, data from the state debt office showed.
The debt office sold 16.9 billion rupees of 15 July 2029 bonds at 26.91 percent after offering 20 billion rupees.
Sri Lanka bond yields were starting to ease with private credit falling but speculation that the foreign investors and the International Monetary Fund would push for a second hair cut on rupee bonds spooked investors, market participants said.
Rupee bond holders have seen their value fall in dollar and real terms with the rupee falling from 182 to 360 to the US dollar.
When the rupee falls, the economy inflates, bringing more nominal rupee revenues and pushing the debt to GDP ratio down in automatic debt sustainability. (Colombo/Aug10/2022)