NSB to float US$ 500M bond

By Paneetha Ameresekere

Ceylon FT: The exchange rate (ER) further strengthened by three Sri Lanka cents (SLc) to Rs 130.20/25 to the US dollar, Friday over Thursday due to inflows, market sources told Ceylon FT. Talks that State- owned NSB is to float another US$ 500 million bond (following last year's US$ 750 million bond), the recent "SLDBs" and the SriLankan Airlines' bond, coupled with improved country ratings, have given a boost to the rupee, they said.

Exporters, and almost everybody else holding dollars, are converting the same. That has given a boost to the local currency, the sources said. There is sufficient liquidity, things are positive, despite the State and its agents borrowing commercially, they said. Rates of borrowing that Sri Lanka commands in international markets are now attractive due to the fact that economic indicators pertaining to the island are positive, they said.

The State on Friday was buying dollars at the Rs 130.20 level, if not for which the rupee would have strengthened further, they said.

Week on week (WoW) as at Friday, the ER has had strengthened by between five and 10 SLc, having had closed the previous week at the Rs 130.25/35 level in two way quotes to the dollar, they said. The sources further said that secondary market trading in government securities was dull, with the market looking for direction from Monday's monetary policy announcement. The benchmark one year maturity closed the week at 6.85% in secondary market trading, six basis points less than the weighted average yield it commanded at that week's primary auction, which was 6.91%.

At the time of going to press, Central Bank of Sri Lanka hadn't released details of its "open market operations" as at Friday. Therefore, it is not possible to give a synopsis of Friday's money market's excess liquidity position, and matters related to the same.
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CIFL depositors urge formation of joint Depositors Forum to safeguard investments in all finance companies

Depositors at the crashed CIFL (Central Investment and Finance Ltd) are preparing to file objections as a prelude in appeal in the Supreme Court against the Appeal Court dismissal of its case against the Central Bank (CB)-led recovery plan.

K. Wijaya Gunawardena, President, CIFL Depositors Association (CIFLDA) said the collapse of the case has seriously affected the moral of the members and they are much concerned that there could be a spate of deaths due to heartburn, shock and despair. The CIFLDA is trying to seek the assistance of a rights group or any other organisation to save their members from mounting medical bills, particularly those who are unable to pay.

He said that the least the government could do is save these lives because all these happened due to the irresponsibility of the CB. He said that the finance companies are set up with the complete knowledge of the CB but it has now become completely unreliable.“Therefore at least to save the depositors in the existing finance companies the CB should create a safety net by way of an insurance framework so that whenever a finance company fails depositors funds could be refunded,” he said.

He suggested that all the depositors of the existing finance companies should form into an association like a deposiotrs forum and demand that the CB set up this safety net.

Apart from the activities of the CIFLDA, a large number of depositors have complained to the Police Fraud Bureau. An official of the Fraud Bureau told the Business Times that 218 CIFL depositors have complained against the CIFL and these were forwarded to the Attorney General for advice on prosecution.
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Fears of Touchwood disposing foreign assets

By Sunimalee Dias

Fresh concerns that assets of troubled Touchwood Investments PLC are being disposed came amidst fears that its former management may have flown to Thailand. This follows the company failing to submit the necessary documents relating to its assets.

The company which was wound up on June 5 following a Commercial High Court order appointing a liquidator to take charge of the assets to settle the investors, has failed to submit details of its assets in a Statement of Affairs to the court appointed liquidator Sudath Kumar.

“There is a significant risk if there are assets outside the country if they would be disposed by the company without the knowledge of the investors,” the liquidator said in an interview with the Business Times on Friday. The main asset highlighted in the petitioner’s written submissions in the Touchwood winding up case related to properties in Thailand, which lawyers for the petitioner Avindra Rodrigo believes was worth over Rs.300 million.

Mr. Kumar was informed by the company’s former Chairman/CEO Lanka Kiwlegedera that he would submit the Statement of Affairs within two weeks in letter dated June 23.

However, this time period has now lapsed and the liquidator with Mr. Rodrigo has filed an application in court since he has not submitted the necessary information to commence the liquidation process.

In this respect the Commercial High Court issued an order on Friday for Mr. Kiwlegedere to appear in court on July 31. Mr. Kumar observed that in the letter sent by Mr. Kiwlegedera it appeared to him that the former management wanted to still take control of the assets and feared they would not reveal the assets of the company since he had signed the letter as Chairman/CEO and it was sent on a company letter head.

He noted that this was not possible since it was going against the court order for the winding up of the company.

In addition, he pointed out that since this letter was copied to the Securities and Exchange Commission and Colombo Stock Exchange it raises questions as to why the regulator remained silent on the matter.

The next date for the hearing and submission of the report by the liquidator in the Touchwood winding up case is scheduled for August 6.

At present over 100 investors had submitted their affidavits on their properties which the liquidator would use for the settlement of the dues to these persons upon the maturity of the agreements.

Touchwood Investments PLC said on June 23 that it has submitted a ‘notice’ of appeal in the Supreme Court against the winding up order issued by the Commercial High Court. The regulator was also informed of this move.

However, so far, no proper appeal has yet been submitted. The company has time within 60 days from the court order to do so.
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