Sri Lanka’s Central Bank records increase in foreign holdings in Sri Lankan rupee bonds
The Central Bank of Sri Lanka has stated that foreign holdings in Sri Lankan rupee bonds grew by Rs. 2.3 billion to Rs. 147.1 billion for the week ended June 26.
According to reports, foreign investors have been net sellers in rupee bonds so far in 2019; with holdings falling from Rs. 157 billion on January 2 after interest rates fell, allowing them to take profits.
There have been some weeks where foreigners bought rupee bonds, including the week ended June 19 when there was a marginal increase in the total, reports state.
Bond yields in the secondary market fell around 20-30 basis points during the week ended June 26 on buying interest.
Local media reports state that rates plunged at a bill auction on Wednesday and on Monday, the state raised 2 billion US dollars through an international sovereign bond for budgetary support, with over three times oversubscription.
While the rates had fallen compared to a similar issuance in March, the spread between Sri Lankan sovereign bonds and US Fed bonds had widened between March and June.
According to dealers, the dovish US Fed and an anticipated rate cut at the next Fed meeting in July has increased expectations of funds flowing into emerging markets such as Sri Lanka.
OSL take:
The increase in foreign holdings in Sri Lanka rupee bonds is indicative of the level of confidence in Sri Lanka’s economy and interest in investment. Therefore foreign investors could confidently explore investment opportunities in Sri Lankan bonds.
| Article Code : | VBS/AT/01072019/Z_1 |