Sri Lankan government bond yields drop in full trade: investors wait.

Yields in Sri Lanka’s Treasury bonds and bills edged down on Wednesday (19) in dull trade as investors took a wait and see stance expecting some  reduction in market interest rates as the government’s borrowing are likely to come down with tax hikes, dealers said.

The bond maturing on 01.07.2025 closed at 31.75/32.00 percent, down from the previous close of 32.00/25 percent.

The bond maturing on 15.07.2029 ended at 30.55/31.10 percent on Wednesday, down from the 30.95/31.10 percent on Tuesday.

The bond maturing on 01.07.2032 closed at 29.30/30.00 percent, down from 29.80/30.00 percent.

The three month T-bill yield closed at 31.75/32.25 percent, down from Tuesday’s close of 32.00/30 percent.

“May be investors want higher rates, however the expectations are for rates to come down going forward, with the borrowings of the government decreasing due to increase in tax earnings.” dealers said.

Dealers who were on a wait and see approach due to unclear directions regarding the local debt restructuring are further indecisive after proposed tax hikes.

The Central Bank’s guidance peg for interbank transactions remained at 363.38 rupees against the US dollar.

The data showed that commercial banks offered dollars for telegraphic transfers between 370.98 and 371.00 for small transactions.

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