Sri Lanka’s treasury bond yields up 1%

October 30, 2006 (LBO) - Sri Lanka's borrowing costs went up by 1-percent at this weekâ€™s bond auction, reflecting market sentiment for higher yields. The Central Bank sold a small quantity of three, four and five-year treasury bonds on Monday at yields higher than the previous auction.

	Treasury Bond Auctions
	3-years	4-years	5-years
Date of Maturity	01-11-2009	01-11-2010	15-10-2011
Coupon Rate	7.60%	7.20%	7.00%
Amount Offered (LKR)	2,000	2,000	2,000
Bids Received (LKR)	2,205	2,210	2,235
Amount Accepted (LKR)	100	100	100
Weighted Average Yield	12.16%	12.25%	12.36%
Date of Settlement	01-11-2006	01-11-2006	01-11-2006
(Source: Central Bank)

Yields for three-year bonds were up 1 percent to 12.16 percent, while four and five-year treasuries went up by the same to 12.25 percent and 12.36 percent respectively.

Yields for three-year bonds in the secondary market are now trading at 13.00 percent amidst thin trade, while there have been no takers for four and five-year maturities.

â€œThe fact that the Central Bank accepted only 100 million rupees from each issue shows they are not happy with what the market had bid,â€ said one trader. Treasury bond yields have been climbing steadily in line with market expectations of a high interest rate outlook amidst rising inflation and heavy military expenditure.