Bond yields rise

Sri Lanka's bond market lost ground on Tuesday and continued to rise stealthily at this week's auction, as a landmine explosion in northern Jafffna killed seven soldiers. Sri Lanka's bond market lost ground on Tuesday and continued to rise stealthily at this week's auction, as a landmine explosion in northern Jafffna killed seven soldiers. The Central Bank sold Rs. 350 million treasury bonds maturing on April 1, 2010 at weighted average yield of 11.



10 percent, the bank said in a statement.

The bank offered billion rupees worth of bonds, which carried a coupon rate of 7.

60 percent. The auction attracted Rs. 1,375 million worth of bids.

Treasury bond yields were up from 11.

08 percent at the last auction held on Oct.





28.

Bond markets are operating on thin volumes ahead of Thursday's budget and fears that continuous violence may rupture the fragile truce between the government and the Tamil Tiger rebels.

Dealers said two-year bonds traded at 11.

07 percent on Tuesday, up from 10.95 percent on Monday.

President Mahinda Rajapakse in his capacity as finance minister, will present the budget, outlining his economic plans and the government's domestic borrowing programme for next year.

-LBO Newsdesk: LBOEmail@vanguardlk.com