Sri Lanka sells 3 year, 8 year bonds

EconomyNext – Sri Lanka has sold 4.7 billion rupees worth of 3 year and 3 month bonds maturing on 15.10.2018 at a weighted average yield of 8.18 percent, the debt office said.

The government offered 10 billion rupees of bonds and got bids worth 21.8 billion rupees, it said.

It also sold 11 billion rupees of 8 year and one month bonds maturing on 01.09.2023 at a weighted average yield of 9.58 percent, having offered 10 billion rupees of bonds and getting bids worth 29 billion rupees.

Sri Lankan shares end at over two-week high; turnover slumps

Sri Lankan shares hit a two-week high on Tuesday, helped by foreign inflows, gaining for a fourth straight session, but turnover slumped to a five-week low as investors were cautious ahead of the Aug. 17 parliamentary elections.

The main stock index ended up 0.35 percent, or 24.22 points, at 7,027.00, its highest close since June 29.

The day's turnover slumped to 367.3 million rupees ($2.75 million), only around a third of this year's daily average of 1.05 billion rupees.

"The market is up on low turnover with selective buying," said Dimantha Mathew, a research manager at First Capital Equities (Pvt) Ltd. "Selective buying interest will be there until the elections are over."

Analysts said hopes of political stability after the election helped sentiment, but the gain cannot be sustained.

The ruling United National Party (UNP) has formed a coalition with some other parties to contest the election. Political analysts see the new coalition could increase the ruling party's chances of winning.

However, a coalition led by Sri Lanka's president has nominated war-time leader Mahinda Rajapaksa to run in elections next month, with allies saying he will stand for the post of prime minister, posing a formidable challenge to the ruling party's election victory.

The stock market saw net foreign inflows of 35.96 million on Tuesday, ending its outflow streak over nine sessions.

Top fixed-line phone operator Sri Lanka Telecom Plc rose 6.43 percent, while Lion Brewery Plc gained 1.31 percent, pushing up the overall index.

President Maithripala Sirisena dissolved parliament on June 26 and scheduled elections for Aug. 17, in an effort to consolidate power and push through political reforms.

($1 = 133.8000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Prateek Chatterjee)

Sri Lanka’s People’s Merchant Finance removes CEO

(LBO) – Sri Lanka People’s Merchant Finance, a subsidiary of People’s Bank of Sri Lanka said it removed the Chief Executive Officer and director of the company following a directive of Monetary Board.

The company said, that in term of section 25(1) (h) of the Finance Business Act, the Monetary Board has directed the company through a letter dated 4th June this year to remove Govindasamy Ramanan from the post of Director and the Chief Executive Officer of the company on the same day.

Lankan apparel industry expands 9.8% in 1Q

Sri Lanka’s apparel exports saw strong demand in the first quarter of 2015 while the Lankan apparel industry expanded at the rate of 9.8%, on the backdrop of 8.8% and 10.9% demand growth from the US and EU apparel markets.

The US and EU accounted for 89% of total apparel exports from Sri Lanka over the year 2014-15. Sri Lankan apparel exports to the EU and the USA increased by 10.9% percent and 8.8%, respectively, against 2013 calendar year and a strong demand was sustained in the first quarter of 2015.

Sri Lanka leading textile manufacturer Textured Jersey Lanka PLC (TJL) said that the company is also directly impacted by demand from domestic apparel manufacturers and foreign retailers.

Knit garment exports from Sri Lanka increased by 11.7% while exports of woven apparel increased by 7.1% in 2014 calendar year. The knit manufacturing segment is showing growth potential, with many countries looking at Sri Lanka as a potential manufacture for this range of garments. The industry growth and TJL’s own customer portfolio being predominantly US and European based, strategically positions TJL to leverage its capabilities to ensure a strong growth trajectory.

A significant development during the year was the commencement of negotiations to regain the Generalised Scheme of Preferences Plus (GSP+) facility for Sri Lanka. If re-instated, the GSP+ facility will provide concessionary access for Sri Lankan apparel, into the Eu and will enhance the growth potential of the entire apparel industry.

The GSP+ would allow duty free exports of Sri Lanka. Given the highly competitive global apparel industry, a price differential such as the offering in GSP+ will significantly boost European demand for Sri Lankan apparel. Predictably, such an advantage will indirectly increase global demand for Sri Lankan textile products.

The concessions will make sourcing fabric within Sri Lanka more attractive and will also make the cost of imports from Sri Lanka into EU countries, reduce, thereby making apparel more competitive in the European markets.
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Govt. considers bailout loan package for tea producers

Hiran H.Senewiratne (hsenewiratne@gmail.com)

The government is now in the process of considering a loan package for all tea producers, to salvage the sector from the on going trade union action and global market price impact on the industry.

The trade union action in tea estates is causing a major crisis to the sector with the sanction imposed against Iran by the USA and the currency crisis in Russia adding insult to injury.

Therefore, the Sri Lanka Tea Board and the Ministry of Plantation Industries were looking at releasing a loan package to tea producers in the country, Sri Lanka Tea Board sources told the Daily News business.

The government will release the package/loan which would be calculated to the value equalent to one month’s working capital of a factory that operates. This amount would differ from factory to factory based on its capacity, Tea Board sources said.

Director Lanka Commodities Brokers Limited Jehan Algama told Daily News business that Sri Lanka accounts for 65 percent of low grown tea production in the world. Russia’s economic crisis has caused a heavy impact on Sri Lanka’s low grown tea. As a result low grown tea prices have fallen drastically during the recent past, he said.

He also said that in recent months the Russian Ruble has depreciated by some 50 percent compared to the US dollar while the international credit rating agency Standard & Poor’s has said there are possibilities of Russia’s credit ratings being lowered further.

Sri Lanka exports around 300 million metric tons of tea annually while some 200 million metric tons from this is low grown tea. Around 40 percent of this low grown tea is purchased by Russia.While Russia’s economic crisis has decreased the amount of tea the country buys from Sri Lanka, this has caused the price of low grown plucked tea to fall from Rs. 85 per kilo to Rs 70 per kilo.

Algama also said the recent statement by US President Barack Obama to relaxed Iran sanction would also impact the tea sector because Iran being the fourth largest oil exporter oil prices would further go down. This would further affect Sri Lanka tea exports to Iran, he said. He added that tea manufacturing has come to a standstill due to the work stoppage in tea estates. Due to this issue tea has not arrived to the Colombo tea auction for more than 10 days.
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Govt. raises $ 301 m via development bonds

Reuters: Sri Lanka raised $ 301 million from the sale of dollar-denominated development bonds on Monday, the Central Bank said.

The Government accepted $291 million in 13-month bonds at six-month LIBOR plus a floating rate of 330.97 basis points (bps) after receiving bids worth $293 million, the Central Bank said in a statement.

It also accepted $10 million out of $12 million total bids in 33-month bonds at six-month LIBOR plus a floating rate of 360 bps.

The Government had offered $75 million for the issue in both tenures. - See more at: