Sri Lanka T-bond yields ease despite debt haircut threats 

ECONOMYNEXT – Yields in Sri Lanka’s Treasury bonds eased on Monday (03) in moderate trade as investors bought the risk-free fixed assets despite the possible risk of local debt restructuring leading to a haircut, dealers said.

A bond maturing on 01.07.2032 ended at 29.50/90 percent on Monday, easing from Friday’s close of 29.80/30.00 percent.

A bond maturing on 01.06.2025 closed at 30.75/90 percent, down from previous day’s close of 30.95/31.05 percent.

A bond maturing on 15.01.2028 closed at 30.80/90 percent, down from Friday’s close of 31.12/20 percent.

Sri Lanka’s central bank’s guidance peg for interbank transactions on Monday was unchanged at 362.90 rupees against the US dollar.

Data showed commercial banks offered dollars for telegraphic transfers between 369.90 and 370.00 for small transactions.

The secondary market remained dull for a few months due to no proper direction on local debt restructuring, despite the fact that President Ranil Wickremesinghe said debt advisors are looking at local debt as a restructuring plan was being developed as part of efforts to make the debt sustainable.

The Central Bank has not given any direction about the local debt so far and has said that the government’s position on debt restructuring is as declared in April 2022, where there is no restructuring of rupee debt.

Dealers said trading was moderate. (Colombo/Oct03/2022)