Sri Lanka's Treasuries yields drop

ECONOMYNEXT - Sri Lanka's Treasuries yields dropped across maturities at Wednesday's auction with the 12-month yield dropped 10 basis points to 6.61 percent, data from the state debt office showed.

The 6-month month yield dropped 04 basis points to 6.99 percent and the 12-month yield dropped 04 basis points to 7.06 percent.

The debt office accepted 3.0 billion rupees of 3-month bills, 17.4 billion rupees of 6-month only 2.6 billion rupees of 12-month bills, totalling 23.0 billion rupees.

There is an estimated 35 billion rupees of bills maturing this Friday, indicating that either the Central Bank will print money to buy the bills or some of it is in its own portfolio.

Intervening in interest rates beyond the overnight policy rates in times of strong credit growth is part of a repertoire of tools used by Sri Lanka's soft-pegged central bank to precipitate balance of payments crisis, critics who are calling for fundamental reforms of the monetary authority say.

On October 28, Sri Lanka sold a 1.5 billion US dollar sovereign bond.

Sri Lankan shares gain for 6th session; Keells leads

Reuters: Sri Lankan shares rose for a sixth straight session on Wednesday to a more than two-week high despite foreign outflows, led by market heavyweight John Keells Holdings Plc.

Foreign investors were net sellers of 226.4 million rupees ($1.61 million) worth of shares on Wednesday, extending the year-to-date net foreign out flow to 3.12 billion rupees.

The main stock index ended 0.15 percent or 10.61 points up at 7,094.09, its highest close since Oct. 12.

The day's turnover was 1.14 billion rupees ($8.09 million), just above this year's daily average of 1.1 billion rupees.

"People are taking some positions and it looks like the interest is coming back to the market," said a stockbroker asking not to be named.

"Retailers have not been active. They are awaiting proper direction and positive sentiment. But the market is looking good and interest level will continue to grow."

Danushka Samarasinghe, head of research Softlogic Stockbrokers, said a $1.5 billion 10-year sovereign bond sale on Tuesday is seen as a positive.

Sri Lanka paid less than it had expected to borrow $1.5 billion via a 10-year sovereign bond on Tuesday, with strong orders helping bring down the yield on the issue to 6.85 percent from an initial guidance of around 7 percent.

However, the borrowing cost for Sri Lanka's largest eurobond issue was expensive compared with the previous 10-year papers.

Prime Minister Ranil Wickremesinghe is expected to announce the country's economic policy in the first week of November, outlining the government's economic priorities ahead of the 2016 budget scheduled for Nov. 20.

Analysts said a government move to implement a budget proposal for a retrospective tax targeting corporates has dented sentiment.

Shares of conglomerate John Keells Holdings rose 1.52 percent. 

($1 = 140.9000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Anupama Dwivedi)