Sri Lanka Bonds Yields Up, Stock Open Lower After Presidential Bombshell

Sri Lanka bonds yield moved up while stocks opened lower after an apparent presidential threat to take-over economic management the prime minister’s party which was played down by a member of his party, dealers said.

Bond yields were quoted around 20 basis points higher in early Monday as markets participants sought more information on a statement by the President that he would take-over economic management from the Prime Minister’s United National Party.

Bond yields have been falling steadily as credit slowed, budgets improved and confidence improved on the future prospects with a reform oriented budget by new finance minister Mangala Samaraweera for 2018.

But the trend reversed Monday.

Three year -year bonds maturing on 01.03.2021 were quoted around 9.35/45 percent from from Friday’s close of 9.20/25 percent, Monday morning dealers said.

8-year bonds maturing on 01.06.2026 were quoted at 9.80/85 up from Friday’s 9.65/70 percent.

9-year bonds maturing on 15.06.2027 were quoted at 9.80/90 up from 9.67/77 percent

12-year bonds maturing on 15.05.2030 were quoted at 9.90/10.20 up from 9.82/88 percent

When yields move up, the price of the bond fall.

Stock also opened lower with the Colombo All Share Index down 0.1 percent to 6,436 points.

Stocks have been moving down for several days amid profit-taking and heightened political rhetoric from the two main coalition partners of the administration ahead of local body elections next month.

Harsha de Silva, Deputy Minister of Prime Ministers’ Ministry of Economic Policy ministry said the President assured that he had no plans to take-over ministries.

Dealers said a take-over of Samaraweera’s ministry in a 2004-style move by then-President Chandrika Kumaratunga would send yields up by over 100 basis points.

Courtesy – economy next