Cabinet awards Rs1.5bn contract to ACL Cables for supplying aerial conductors

LBO – Sri Lanka’s cabinet of ministers has approved a proposal to award a contract of supplying 2,500 km of aerial bundle conductors to ACL Cables.

The proposal presented by Power Minister Ranjith Siyambalapitiya shows that the value of the contract is 1,456 million rupees.

Meanwhile, the government has also decided to establish a 10 Megawatt solar power plant in a land near the grid substation Valachchenai upon construction, ownership and maintenance basis.

Accordingly, the cabinet has approved the proposal to award this contract to Didul (Pvt.) Ltd at a cost of 12.49 rupees per 1 Kilowatt Hour.

Sri Lanka’s 01-year Treasury yield rises to 9.43-pct

ECONOMYNEXT - Sri Lanka’s 01-year Treasury Bill yield rose 04 basis points to 9.43 percent at an auction Wednesday from last week, data from the state debt office showed.

The 3-month yield edged up 03 basis points from a week earlier to 8.35 percent while the 06-month yield stayed steady at 8.85 percent.

The state debt office offered 15 billion rupees of Treasury Bills and accepted bills worth 11 billion rupees, having got bids of 31 billion rupees.

Sri Lankan shares hit 15-month closing low on foreign selling

Reuters: Sri Lankan shares extended losses on Wednesday to hit their lowest close in more than 15 months as continued foreign selling in blue-chip stocks dampened sentiment.

Concerns about lower economic growth also dented sentiment, analysts said.

The Colombo stock index declined for a 17th session in 19 and closed 0.61 percent weaker at 6,044.03, its lowest close since March 30, 2017. On Monday, the index fell the most in intraday trade in nearly 28 months.

Foreign investors sold for the tenth consecutive session, extending the foreign outflow to 1.1 billion rupees ($6.94 million) worth of equities.

Foreign selling has continued, and this is mainly due to foreign investors’ exit from emerging markets,” said Dimantha Mathew, head of research, First Capital Holdings.

Foreign investors net sold equities worth 82.1 million rupees, extending the year-to-date foreign outflows to 1.82 billion rupees.

Turnover was 261.6 million rupees, less than a third of this year’s daily average of 926.2 million rupees.

Top conglomerate John Keells Holdings closed 1.3 percent lower, Distillers Co of Sri Lanka Plc ended 1.5 percent lower, leading fixed line telephone operator Sri Lanka Telecom Plc ended down 3.2 percent and Lanka ORIX Leasing Co Plc closed 3.1 percent lower.

Investors are waiting for some positive news both on the economic and political fronts, said analysts, adding that the government’s policy implementation had been sluggish since both main parties in the ruling coalition suffered local polls in February.

Finance Minister Mangala Samaraweera said last month that the economy was likely to grow about 4.5 percent this year, below a central bank estimate of 5 percent.

The International Monetary Fund (IMF) said on June 20 that Sri Lanka’s economy remained vulnerable to adverse shocks because of sizable public debt and large refinancing needs.

Ratings agency Moody’s said on Wednesday a strengthening U.S. dollar since mid-April has increased the credit risk of several emerging markets, including Sri Lanka, due to currency depreciation.

Moody’s said a strong U.S. dollar would also lead to a drop in foreign exchange reserves of countries such as Argentina, Ghana, Mongolia, Pakistan, Sri Lanka, Turkey, and Zambia.

($1 = 158.6000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez, Editing by Sherry Jacob-Phillips)

Colombo Stock Exchange to launch new board for SME sector security listings

LBO – Sri Lanka’s Securities and Exchange Commission with the Colombo Stock Exchange will be launching a Small and Medium Enterprise Board for the SME sector next week.

The SME Board which is to be launched for the first time in Sri Lanka will provide an opportunity for the SME sector to empower entrepreneurship by generating capital through the stock market.

This new SME Board named as ‘Empower’ will be introduced in addition to the Main Board and Dirisavi Board already existing in the Colombo Stock Exchange.

The Colombo Stock Exchange has 299 companies representing 20 business sectors as at 29th March 2018, with a market capitalization of 3,032.7 billion rupees.

Public companies incorporated under the Companies Act or any other statutory corporation, incorporated under the laws of Sri Lanka are currently eligible to seek a listing on the exchange to raise debt or equity.

Companies desiring to be admitted to the official list of the exchange and to secure a listing of their securities will be required to comply with the listing rules of the exchange.

Colombo stocks sink to new lows with S&P SL 20 index down 10% for 2018

LBO – Colombo stocks continued their decline hitting new lows for 2018.

Key indices were both lower with the All Share Price Index (ASPI) down .77% and the S&P SL 20 down 1.34% on the session.

Turnover was a weak Rs566mn (US$3.6mn).

The trend of foreign selling continued as net foreign sales were Rs183mn (US$1.2mn).

Year to date the ASPI is down 4.52% while the S&P SL 20 is now down 10%.

Index heavyweight John Keells Holdings (JKH) was hit hard down 3.4%, with trading in its shares accounting for 32% of the total paltry market turnover.

With stocks moving down steadily and closing at the lows of the day, several brokers expect the pain to continue.

Sri Lanka's Commercial Bank Basel III bonds rated a notch below

ECONOMYNEXT - Basel III compliant bond sold by Sri Lanka's Commercial Bank has been rated 'AA-(lka)' a notch below the bank's 'AA(lka/Stable) rating, Fitch, a rating agency said.

Basle III compliant bonds will convert to equity in case of capital erosion.

The final rating is the same as the expected rating assigned on 14 February 2018 and follows the receipt of documents conforming to information already received.

The full statement is reproduced below:

Fitch Rates Commercial Bank of Ceylon's Basel III Sub Debt Final 'AA-(lka)'

Fitch Ratings-Colombo-03 July 2018: Fitch Ratings has assigned Commercial Bank of Ceylon PLC's (CB, AA(lka)/Stable) proposed Basel III-compliant subordinated unsecured debentures a final National Long-Term Rating of 'AA-(lka)'.

The final rating is the same as the expected rating assigned on 14 February 2018 and follows the receipt of documents conforming to information already received.

The debentures, totalling LKR10 billion, have maturities of five and 10 years, carry fixed coupons and will be listed on the Colombo Stock Exchange. The notes include a non-viability clause and will qualify as regulatory Tier 2 capital for the bank. The bank plans to use the proceeds to strengthen its Tier 2 capital base and support its loan book expansion.

KEY RATING DRIVERS Fitch rates the Basel III Tier 2 notes one notch below the bank's National Long-Term Rating of 'AA(lka)' to reflect the notes' higher loss-severity risks compared with senior unsecured instruments due to their subordinated status and higher loss-severity risks relative to senior unsecured instruments. The notes would convert to equity upon the occurrence of a trigger event, as determined by the Monetary Board of Sri Lanka.

CB's National Long-Term Rating is used as the anchor rating because it reflects the bank's standalone financial strength. Fitch believes the bank's standalone credit profile best indicates the risk of non-viability.

Fitch has not differentiated the notching on the notes from the notching on CB's legacy Tier 2 notes, as it is assumed that the authorities would step in late, moving the point of non-viability close to liquidation.

Fitch has not applied additional notching to the notes for non-performance risk, according to our criteria, as the notes have no going-concern loss-absorption features.

RATING SENSITIVITIES The rating of the notes will move in tandem with CB's National Long-Term Rating.

Fitch Ratings-Colombo-03 July 2018: Fitch Ratings has assigned Commercial Bank of Ceylon PLC's (CB, AA(lka)/Stable) proposed Basel III-compliant subordinated unsecured debentures a final National Long-Term Rating of 'AA-(lka)'.

Sri Lankan shares hit 15-month closing low on foreign selling

Reuters: Sri Lankan shares extended falls on Tuesday to a 15-month closing low as continued foreign selling in blue chips, political uncertainty and concerns about lower economic growth dented investor appetite for risky assets.

The Colombo stock index declined for a 16th session in 18 and closed 0.77 percent weaker at 6,081.08, its lowest close since April 3, 2017. On Monday, the index fell the most in intraday trade in nearly 28 months.

Foreign investors sold the island nation’s risky assets for a ninth consecutive session, extending the foreign outflow to 1.02 billion rupees ($6.44 million).

“Foreign selling was the main reason for the fall. Political uncertainty is the main reason that has kept investors on the sidelines,” said Prashan Fernando, CEO, Acuity Stockbrokers.

Foreign investors net sold equities worth 182.8 million rupees, extending the year-to-date foreign outflows to 1.82 billion rupees.

Turnover was 566.5 million rupees, less than this year’s daily average of 932 million rupees.

Top conglomerate John Keells Holdings closed 3.4 percent lower, Lanka Orix Leasing Company fell 4.2 percent, and leading mobile phone services provider Dialog Axiata slipped 1.4 percent.

Investors are waiting for some positive news both on the economic and political fronts, said analysts, adding that the government’s policy implementation had been sluggish since both main parties in the ruling coalition suffered local polls in February.

Finance Minister Mangala Samaraweera said last month that the economy was likely to grow about 4.5 percent this year, below a central bank estimate of 5 percent.

The International Monetary Fund (IMF) said on June 20 that Sri Lanka’s economy remained vulnerable to adverse shocks because of sizable public debt and large refinancing needs.

Ratings agency Moody’s said on Wednesday a strengthening U.S. dollar since mid-April has increased the credit risk of several emerging markets, including Sri Lanka, due to currency depreciation.

Moody’s said a strong U.S. dollar would also lead to a drop in foreign exchange reserves of countries such as Argentina, Ghana, Mongolia, Pakistan, Sri Lanka, Turkey, and Zambia. 

($1 = 158.3000 Sri Lankan rupees)

(Reporting by Shihar Aneez; Editing by Subhranshu Sahu)