Central Bank told primary dealers that four and five year bond auctions will be held soon after gilt yields declined in the market. Central Bank says four-year bonds will be on offer at next Thursday's auction after a lapse of almost a year.
Five year bonds will soon follow according to a Central Bank official.
The bank stopped issuing bonds with longer than two year maturities after rising rates made them too expensive for the government.
The spike in rates also dried up trading in long bonds in the secondary market.
Attempts to issue longer maturity bonds come on the back of a dip in interest rates in the primary auctions with low bidding from state institutions.
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Primary dealers say with the drop in rates the Central Bank is likely to maintain policy interest rates at the current level.
All six primary dealers responding to an LBR survey said the Central Bank is unlikely to change the Repo and Reverse Repo rates at the next Monetary Board meeting on Wednesday.
The government also announced the issue of another traunch of dollar denominated development bonds.
Subscription for the development bonds will close on Tuesday for US$ 55 million of two-year bonds.
-LBR Newsdesk: LBOEmail@vanguardlanka.com