Sri Lanka Treasuries yields flat

ECONOMYNEXT - Sri Lanka's Treasuries yields were flat at Wednesday's auction with Rs13.39 billion of bills sold, data from the state debt office showed, against an estimated Rs31.6 billion of maturing bills.

The three-month yield edged up 2 basis points to 8.82 percent with Rs1.6 billion of bills sold and the six-month yield rose 01 basis point to 9.76 percent with Rs9.6 billion of bills sold.

The 12-month yield also rose 1 basis point to 10.53 percent with Rs2.0 billion of bills sold.

This week an estimated Rs31.6 billion of bills are maturing.

It is not clear whether the balance bills were already held by the Central Bank. If the bills are already held by the Central Bank, rolling over them will not add new rupee reserves to the banking system and drive credit and imports up.

Over the past year, the Central Bank printed over Rs200 billion to generate a balance of payments crisis and bust the currency. Its bill holding was Rs448 billion as of this week.

Last week, after 'squaring up' day, the Central Bank's bill holding rose to Rs248 billion on June 1, from Rs222 billion as banks borrowed from its overnight window.

Market participants have borrowed Rs21.6 billion from the overnight printed money window, but plus liquidity banks have deposited Rs35.7 billion in the excess liquidity window as of yesterday.

The Central Bank in the past has generated balance of payments trouble by permanently accommodating liquidity shortages by bill purchases at the auction.

Sri Lankan shares end steady; turnover slumps to over 2-1/2 mth low

Reuters: Sri Lankan shares closed steady on Wednesday as positive sentiment after an IMF loan approval was offset by concerns over rising interest rates and foreign fund outflows.

Turnover was 390.8 million rupees ($2.68 million), the lowest since March 19, and nearly half of this year's daily average of around 782.5 million rupees.

The benchmark Colombo stock index ended 0.03 percent higher at 6,526.12.

"We don't expect a lot until the interest rates are down," said Dimantha Mathew, head of research at First Capital Equities (Pvt) Ltd.

Treasury bill yields have risen between 16 and 36 basis points to near three-year highs in the last three weekly auctions through Wednesday despite the central bank leaving key policy rates steady for a third straight month on May 20.

The International Monetary Fund's (IMF) executive board approved a three-year $1.5 billion loan to support Sri Lanka's economic reform agenda, the global lender said on Saturday.

Investors are concerned about foreign outflows, with overseas investors offloading a net 38.2 million rupees worth of shares on Wednesday, extending the year-to-date net foreign outflow to 5.7 billion rupees.

Stockbrokers said a rise in interest rates could be detrimental to risky assets if they jumped beyond 12 percent. The average prime lending rate (AWPR) edged up 8 basis points to 10.23 percent in the week ended June 3.

Ceylon Cold Stores Plc rose 1.90 percent, Ceylon Tobacco Company Plc gained 0.91 percent, Sri Lanka Telecom Plc added 0.76 percent, while conglomerate John Keells Holdings Plc increased 0.32 percent. 

($1 = 145.7000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Subhranshu Sahu)

Sri Lanka appoints four foreign banks as lead managers for eurobond

COLOMBO, June 7 (Reuters) - Sri Lanka, which last month announced plans to raise $1.5 billion from the sale of a 10-year sovereign bond, has mandated four foreign banks as lead managers, Finance Minister Ravi Karunanayake said on Tuesday.

The banks are Citigroup, Deutsche Bank, HSBC and Standard Chartered, Karunanayake told Reuters.

"We have mandated the same banks we did last year and we are looking at the maximum we can go," he added.

The funds raised will be used to fund a budget gap and reschedule some expensive short-term loans, the government has earlier said.

Chinese visitors to Sri Lanka up 32-pct in May

ECONOMYNEXT – China remains Sri Lanka’s fastest growing tourism market with the number of visitors up 31.5% to 16,004 in May 2016 from a year ago, tourism office statistics show.

The number of Chinese tourists visiting the island, including those from Hong Kong, were up 42.7% to 112,890 in the five months to may 2016 from the same period last year, the fastest growth of all tourism markets.

Total tourist arrivals rose 10.1% in May 2016 from the year before with arrivals up 18.4% in the January-May period.

India remains the biggest source of visitors, up 7.9% to 34,259 in May 2016 from a year ago and up 21.9% in the five months to May.

Arrivals from traditional markets like the United Kingdom, Germany and France also showed double-digit growth rates in the five month period but visitors from Russia fell.