Bond auction raises Rs.245 bn amid political uncertainty
Sri Lanka raised Rs 245 billion from a Treasury bond auction this week, which initially aimed for Rs 290 billion. However, all bids for bonds maturing in 2034 were rejected due to a recent spike in rates, driven by growing political uncertainty, according to data from the state debt office.
This is amidst accusations by MP Patali Champika Ranawaka that the Central Bank was planning to offer unusually high interest rates on the bonds issued. He alleged that a corrupt group was set to exploit the bond sales, but a senior Treasury official denied these claims, attributing investor caution to the upcoming election.
The auction fully sold Rs. 100 billion worth of bonds maturing on February 15, 2028, at a weighted average yield of 13.79 per cent. Out of Rs.150 billion of bonds maturing on June 15, 2029, Rs.145.96 billion was sold at an average yield of 13.98 per cent, with other bids being rejected. No bids were accepted for the Rs.40 billion worth of bonds maturing on September 15, 2034.
With the presidential election scheduled for September 21, many investors were hesitant to buy long-term bonds, according to dealers.
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