Sri Lanka bourse at 1-week high on Keells

(Reuters) - Sri Lankan shares ended firmer on Tuesday to hit one-week highs, led by diversified shares such as John Keells Holdings Plc, after the nation's parliament approved three big mixed-development projects last week.

But the government's refusal to allow casinos at these projects hurt the momentum, dealers said.

The country's main stock index rose 0.23 percent, or 14.31 points, to 6,186.25, its highest since April 22.

The Sri Lankan parliament on Friday approved two projects for luxury resorts, worth up to $1,250 million, by John Keells, that will include hotels and shopping malls, and by Australian gaming tycoon James Packer's Crown Ltd.

Shares in Keells rose 1.28 percent to 238 rupees. Vallibel One, which ended flat at 18.20 rupees, got parliamentary approval on Thursday to invest $300 million in an integrated luxury tourist resort in the island nation's proposed exclusive gaming zone.

The market has gained 3.65 percent so far this month as some retail investors started buying risky assets in the face of low interest rates.

Lower interest rates have helped the market gain in the past few weeks, stockbrokers said.

Central bank on Tuesday rejected all bids at the benchmark 91-day treasury bills, which is already at its lowest since January 2007, while yield in the 182-day and 364-day t-bills also fell to its lowest since 2007, data showed.

Last week the central bank kept policy rates steady at multi-year lows.

The day's turnover was 570.8 million rupees ($4.4 million), well below this year's daily average of 952.8 million rupees.

Offshore investors were net buyers of 48.3 million rupees worth of stocks on Tuesday. But they have been net sellers of 7.14 billion rupees so far this year. 

($1 = 130.6300 Sri Lanka Rupees) 

(Reporting by Ranga Sirilal; Editing by Anand Basu)

Sri Lanka Treasuries yields steady

Apr 29, 2014 (LBO) - Sri Lanka's Treasuries yields were steady at Wednesday's auction with 12-month yield unchanged at 7.02 percent, date from the state debt office showed.

There were no sales of 3-month bills. Last week 3-month bills were sold for a weighted average yield of 6.58 percent.

The 6-month yield was 6.78 percent, down one basis point.

The debt office sold 3.9 billion rupees of 6-month bills, 7.4 billion rupees of 12 month bills totaling 11.3 billion rupees after offering 15.0 billion rupees of maturing bills at the auction.

Related News:
http://www.cbsl.gov.lk/pics_n_docs/latest_news/press_20140429e.pdf

Sri Lanka stocks close up 0.2-pct

Apr 29, 2014 (LBO) - Sri Lanka's stocks close up 0.23 percent Tuesday with diversified John Keells Holdings gaining amid net foreign buying, brokers said.

The Colombo benchmark All Share Price Index closed 14.31 points higher at 6,186.25 up 0.23 percent. The S&P SL20 closed 10.98 points higher at 3,405.32, up 0.32 percent.

Turnover was 570.90 million rupees, up from 423.81 million rupees a day earlier with 113 stocks close positive against 72 negative.

Union Bank closed 1.00 rupee higher at 21.40 rupees and The Finance Company closed 1.20 rupees higher at 12.20 rupees, attracting most number of trades.

Foreign investors bought 153.46 million rupees worth shares while selling 105.18 million rupees worth shares.

John Keells Holdings closed 3.00 rupees higher at 238.00 rupees contributing most to the index gain.

JKH’s W0022 warrants closed 40 cents higher at 67.50 rupees and its W0023 warrants closed 60 cents higher at 72.60 rupees.

Commercial Leasing and Finance closed 20 cents higher at 4.00 rupees and LOLC closed 60 cents higher at 76.10 rupees.

Sri Lanka Telecom closed 70 cents higher at 48.90 rupees and Dialog Axiata closed flat at 9.30 rupees.

Richard Pieris and Company closed 30 cents higher at 6.90 rupees and Expolanka Holdings closed 50 cents higher at 10.00 rupees.

Ceylinco Insurance closed 119.30 rupees lower at 1,270.70 rupees and Asiri Hospital Holdings closed 50 cents lower at 21.50 rupees.

Vallibel One closed flat at 18.20 rupees.

New identity for DFCC, NDB to be annulled?

The DFCC and NDB Banks are to be annulled, reports say.

The nullifying is to be done related to the Central Bank's decision to merge the two entities to set up a new bank, using all resources of DFCC and NDB, reports add.

However, a final decision with regard to the name or the management structure of the new bank is yet to made.

The DFCC was founded under a special Act while the NDB was established under the Banking Act.

It is said that in order for the merger to take place, the Parliament Act on which the DFCC was established, should be amended in Parliament, reports say.

The biggest stakeholders of both entities are state corporations, Employees' Provident Fund (EPF) and the Employees' Trust Fund (ETF).

From the private sector based stakeholders, Harry Jayawardena's Distilleries Group take the lead in DFCC bank while at the NDB, it is Ashok Pathirage, MD / Chairman of the Softlogic Group.www.srilankamirror.lk

Sri Lanka 'BB-' rating confirmed, foreign debt, deficits high: Fitch

Apr 28, 2014 (LBO) - Fitch Ratings has confirmed a 'BB-' rating on Sri Lanka with a stable outlook on strong economic growth but said state debt was over twice that of similar rated countries and foreign debt three times as much.

Sri Lanka's rating is three levels below the lowest investment grade rating of 'BBB-'. The outlook was stable.

"Official data do not point to overheating of the economy, as inflation (4.2 percent in March) and credit growth (4.4 percent in February) are low," Fitch Ratings said.

"However, average inflation over the past five years has been high (6.2 percent) and volatile compared with peers (5.0 percent median for the 'BB' peer group) and the potential for a build-up of future imbalances exists."

Fitch said authorities had a pro-growth bias with monetary policy being eased despite high official growth.

The public finances are weak relative to peers despite fiscal consolidation.

Both the budget deficit (5.9 percent of GDP in 2013) and government debt burden (78.3 percent of GDP in 2013) are more than double the 'BB' category medians of 2.7 percent and 35.9 percent of GDP, respectively.

"The 2014 budget signals commitment to medium-term debt reduction to maintain a gradual fiscal consolidation path, although the process is slow and to a large extent built on revenue projections that may turn out too optimistic," Fitch said.

The current account deficit has fallen from 6.7 percent of GDP in 2012 to 3.9 percent in 2013.

A current account deficit is generally caused when inflows that generate a surplus in the capital accounts is spent by domestic players. In Sri Lanka the government is a net borrower abroad. Private foreign borrowings are also picking up.

Foreign investments when spent, also expands the current account through capital imports.

But the current account deficit can also surge beyond the capital account surplus when money is printed by a central bank to sterilize foreign exchange sales during a so-called a balance of payments crisis and forex reserves are run down as happened in 2011 and 2012.

Fitch said in 2014 the external current account deficit is expected to narrow to 3.2 percent of gross domestic product.

Only relatively small part of the current account deficit was financed by foreign direct investments Fitch said.

Hence, net external debt (45.1 percent of GDP in 2013) was almost triple the 'BB' peer category median of 15.9 percent of GDP.

Band debts were 5.6 percent of loans in 2013 which Fitch said was "relatively high" and was expected to rise to 6 percent in 2014.

"However, the banking sector is not very large relative to the economy, with the credit to GDP ratio at only around 40% at end-2013," Fitch said.

"Rapid credit growth in the past elevated Sri Lanka into the highest '3' category of Fitch's Macro-Prudential Indicator."