Sri Lankan shares hit near 3-wk closing high on eurobond issue

Reuters: Sri Lankan shares closed at their highest in nearly three weeks on Tuesday, the fifth straight session of gains, as confidence in a new sovereign bond issued by the island nation helped boost investor sentiment.

Sri Lanka raised $1.5 billion in its first sale of dual-tranche eurobonds on Monday, at a lower borrowing cost than initially expected, as yield-hungry global investors put in over $5.5 billion in offers.

The benchmark Colombo stock index ended 0.5 percent higher at 6,401.31, its highest close since June 22. It gained 1.3 percent last week, its first weekly gain in four.

Investors, mainly local, bought into battered stocks after recent losses, although the day's turnover was moderate.

"We see some investor confidence after the sovereign bond sale. It shows there is a huge demand for Sri Lankan bonds. Market expects some of these foreign investors might come into shares in future," a stockbroker said asking not to be named.

Turnover stood at 562.6 million rupees ($3.87 million), below this year's daily average of around 736 million rupees.

Overseas investors, who have offloaded shares worth a net 5.29 billion rupees ($36.38 million) so far this year, bought equities worth a net 2 million rupees on Tuesday.

Shares have been on a downward trend recently, hitting their lowest close since April 7 on Monday after falling for 10 out of 11 sessions, on worries over a capital gains tax on stocks, high interest rates and policy uncertainty.

Shares in top mobile phone operator Dialog Axiata gained 1.9 percent, while top lender Commercial Bank of Ceylon rose 1.4 percent.

($1 = 145.4000 Sri Lankan rupees) 

(Reporting by Shihar Aneez; Editing by Biju Dwarakanath)

Sri Lanka’s sovereign bond orders top USD4.5 bln: source

(Reuters) – Sri Lanka’s first dual-tranche sovereign bond orders exceeded $4.5 billion while the final guidance for both tranches fell at least 25 basis points from the initial guidance, a source close to the deal told Reuters.

The source said the final guidance for the 5.5-year tranche was about 5.8 percent (+/-5BPS) lower than initial guidance which was in the area of 6.125 percent.

For the 10-year bond final guidance was around 6.875 percent (+/-5BPS) lower than the initial guidance of around 7.125 percent.

In comparison, bonds due 2021 and 2025 are trading at a yield of 5.5 percent and 6.6 percent respectively.

“It may be absorbed given the lack of supply. We are yet to see if it will perform well in the secondary market given the valuation,” said a Singapore-based analyst.

He said the 10-year tranche looks fairly valued on the current levels and the 5.5-year bond yield will be a attractive for investors as long as it does not fall below 6 percent.

Three sources close to the deal said the island nation could raise up to $1.5 billion, as book building began in Asia early on Monday.

Finance Minister Ravi Karunanayake told Reuters the government saw an opportunity in the capital market through dual-tranche bonds.

“After the Brexit, investors are looking for safe-heavens and I think dual tranche is an opportunity to get these investors attracted to our bond deals.”

Moody’s assigned a B1 rating to Sri Lanka’s global bond offering provisionally, and said it expected to remove provisional status of the rating upon the closing of the proposed issuance and review of final terms.

Asian sovereign bonds have rallied this year as investors looked for yields in a low rate environment. According to JACI benchmarks, dollar bonds issued by Sri Lanka produced total returns of 10.11 percent in the year to date, more than established issuers such as the Philippines.

According to Thomson Reuters data, hard currency bond primary issuance volumes in Asia ex-Japan ex-Australia are down 11.3 percent in the first half of the year with high yield volumes down 56.4 percent.

Citigroup, Deutsche Bank, HSBC and Standard Chartered are joint bookrunners. The deal is expected to be rated B1/B+/B+, in line with the issuer, and should price on Monday.

Last October, Sri Lanka sold a $1.5 billion 10-year bond at 6.85 percent.

Sri Lanka launches sovereign bond

ECONOMYNEXT - Sri Lanka has launched a sovereign bonds seeking 5 and 10 year funds with Citi, Deutsche Bank, HSBC and Standard Chartered as lead managers, a media report said.

Bloomberg Newswires said indicative price were 6.125 percent and 7.125 percent range.

A sovereign-sized bond has is a minimum of 500 million dollars.

Sri Lanka is also separately marketing a 500 million dollar syndicated loan which is also expected to close today. 

Sri Lankan shares post over 2-wk closing high on foreign buying

Reuters: Sri Lankan shares rose for a fourth straight session on Monday and posted their highest close in more than two weeks, as foreign investors continued to buy into battered banking and diversified stocks after recent losses.

Overseas investors, who have offloaded shares worth a net 5.29 billion Sri Lankan rupees ($36.48 million) so far this year, bought equities worth a net 344.5 million rupees on Monday.

Foreign investors have bought a net 1 billion rupees worth shares in the four straight sessions through Monday.

Turnover was at 878.8 million rupees, more than this year's daily average of 737.3 million rupees.

The benchmark Colombo stock index ended 0.09 percent higher at 6,372.24, its highest close since June 23. It gained 1.26 percent last week, the first weekly gain in four.

"Some positive sentiment is building up with the sovereign bond yield is coming down compared to the initial price guidance," said Dimantha Mathew, head of research, First Capital Equities (Pvt) Ltd.

Sri Lanka has received orders exceeding $4.5 billion for a two-tranche bond it launched on Monday forcing the yields lower whit the final guidance for the 5.5-year tranche around 5.8 percent (+/-5BPS) lower than initial guidance which was in the area of 6.125 percent.

For the 10-year bond final guidance was around 6.875 percent (+/-5BPS) lower than the initial guidance of around 7.125 percent.

Shares have been on a downward trend recently, hitting their lowest close since April 7 on July 4 after falling 10 out of 11 sessions, on worries over a capital gains tax on stocks, high interest rates and policy uncertainty.

Shares of biggest listed lender Commercial Bank of Ceylon Plc rose 1.85 percent, while those conglomerate John Keells Holdings Plc rose 0.28 percent. 

($1 = 145.0000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez Editing by Jeremy Gaunt)

Sri Lankan shares post 2-wk closing high on foreign buying

Reuters: Sri Lankan shares rose for a third straight session on Friday and posted their highest close in two weeks, as foreign investors continued to buy into banking and diversified stocks after recent losses.

Overseas investors, who have offloaded shares worth a net 5.63 billion rupees ($38.83 million) so far this year, bought equities worth a net 179.7 million rupees on Friday.

Turnover rose to the highest level since May 27, at 1.02 billion rupees, well above this year's daily average of 736.1 million rupees.

"Buying interest is slowly coming into the market, with signs of an improvement in macroeconomic factors," said Dimantha Mathew, head of research, First Capital Equities (Pvt) Ltd.

"Net foreign buying is also boosting local investors' confidence."

The benchmark Colombo stock index ended 0.88 percent higher at 6,366.31, its highest close since June 24. It gained 1.26 percent this week, the first weekly gain in four.

Shares have been on a downward trend recently, hitting their lowest close since April 7 on Monday after falling 10 out of 11 sessions, on worries over a capital gains tax on stocks, high interest rates and policy uncertainty.

Shares of Ceylon Cold Stores Plc jumped 6.31 percent, while those of conglomerate John Keells Holdings Plc and Commercial Bank of Ceylon Plc rose 1.01 percent and 1.64 percent, respectively. 

($1 = 145.0000 Sri Lankan rupees) 

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

Sri Lankan shares post over 1-wk closing high on foreign buying

Reuters: Sri Lankan shares rose for a second straight session on Thursday and posted their highest close in more than one week, as foreign investors bought into banking and diversified stocks.

Overseas investors, who have offloaded shares worth a net 5.81 billion rupees ($40 million) so far this year, bought equities worth a net 466.96 million rupees on Thursday.

Turnover rose to the highest level since May 27, at 960.9 million rupees, well above this year's daily average of 733.8 million rupees.

The selling pressure seems to have cleared off and positive signs are getting in to the market slowly, said Dimantha Mathew, head of research, First Capital Equities (Pvt) Ltd.

"Investors are waiting to see Prime Minister Ranil Wickremesinghe's restructuring plans in August," Mathew added.

The benchmark Colombo stock index ended 0.48 percent higher at 6,310.69, its highest close since June 27.

Sri Lankan markets were closed on Wednesday for a public holiday.

Shares have been on a downward trend recently, hitting their lowest close since April 7 on Monday after falling 10 out of 11 sessions, on worries over a capital gains tax on stocks, high interest rates and policy uncertainty.

Shares of Lanka ORIX Leasing Co Plc gained 0.87 percent, while those of Cargills (Ceylon) Plc and Hatton National Bank Plc rose 5.93 percent and 2 percent, respectively. Conglomerate John Keells Holdings Plc added 0.36 percent. 

($1 = 145.2500 Sri Lankan rupees) 

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

Sri Lanka watching for results from recent tightening: CB Governor

ECONOMYNEXT - Sri Lanka is watching for the effects of monetary policy measure to play out, and a recent spike in inflation could be due to sales taxes, Central Bank Governor Indrajith Coomaraswamy said as inflation continued to climb up.

"We still haven't seen the full effects of what had been done," he told reporters in Colombo at his first press conference being made Central Bank Governor.

He said the effect of tightening took between 9 to 12 months according to what Deputy Governor Weerasinghe said.

"Some measures have been taken, They seem to be having an effect, So we will keep watch and see."

Inflation could also be spiking due to value added tax, which had to be stripped out, Coomaraswamy said.

Analysts had expected the central bank to wriggle out of a rate hike by pointing to the increase in value added tax. It had in the past also wriggled out out timely rate hikes pointing 'supply shortfalls' and 'external' factors..

"Core-inflation has been somewhat more stable," he said.

Sri Lanka's inflation rose to 6.0 percent in June 2016 exceeding the inner bank of an International Monetary Fund program. Meanwhile so-called core-inflation, which in Sri Lanka has more non-traded items, hit 6.4 percent. In the past when core-inflation was lower than headline inflation, the central bank had used it as an excuse to wriggle out of rate hikes, and generated high inflation and currency depreciation in its wake.

The central bank released about 300 billion rupees of liquidity tied up in term repos in over 2015, cut rates in April spooking foreign investors in domestic bonds and printed over 200 billion rupees outright generating a balance of paymetns crisis and busting the rupee from 131 to 147 in sparking the current cycle of monetary instability.

Belatedly it tightned policy by raising rates back to January levels and also raised the reserve ratio, a measure that has been abandoned by most central bank banks.

However over the past two months the central bank had not bought lot of Treasury bills outright to inject excess demand to the economy but has been injecting cash overnight to banks, after defending the peg. Injecting cash overnight puts pressure on banks which are short of cash to raise deposits.