Thursday 26 February 2015

30 year old T-bond on offer

By Paneetha Ameresekere

Ceylon Finance Today: The Central Bank of Sri Lanka (CBSL) for the first time after more than 10 years, will be issuing a 30 year old (2045) maturing Treasury (T) bond to the market tomorrow (Friday). The value of this tenure is Rs 1billion.


The last time such a tenure was offered was when Ranil Wickremesinghe's UNP/UNF government was in power during the period December 2001 to April 2004.

The coupon rate prescribed for tomorrow's tenure is 12.5% per annum. But market sources told Ceylon FT that the yield expected to be fetched for the 30 year old tenure would be more than 12.5%.

However, what was being traded in the market yesterday were those of four, six and seven year tenures, that is, those of 2019 maturities which fetched yields of between 7.40-7.50%, 2021 maturity (7.65-75%) and 2022 maturity (7.85%) respectively.

While those of the 2019 and 2021 maturities saw their yields increase by three basis points (bps) each, yields of 2022 maturities increased by five bps at yesterday's trading, market sources told Ceylon FT. Those increases were caused primarily due to trading, they said.

Nevertheless, sources expected market's appetite to be for those three tenures, namely the 2019, 2021 and 2022...maturities to continue and not be desirous of the 2045 maturity that would be offered to the market tomorrow.

Meanwhile, yesterday's T-bill primary auction saw the weighted average yields of 91 day (three months), 182 day (six months) and 364 day (one year) maturities increasing by four, six and one bp to 5.98%, 6.09% and 6.13% respectively, week on week.

The reason for the yields increase is because excess liquidity is in the hands of only a few banks, sources said. The majority of Sri Lanka's over 20 commercial banks have a problem as far as their excess liquidity positions are concerned, they said. In related developments, Rs 66.4 billion maturing repos will realize tomorrow. Market's excess liquidity on Tuesday was Rs 16.8 billion.
www.ceylontoday.lk

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