Sri Lanka’s rupee weakened and long-term bond yields rose on Thursday despite the same-day announcement of a staff-level agreement with the International Monetary Fund, dealers said.
The rupee closed at 315.55/65 to the US dollar in the spot market, weaker than 315.30/40 the previous day. Bond yields at the longer end of the curve moved higher, pointing to a curve steepening even as short-end yields held steady.
A bond maturing on 15 December 2026 closed flat at 8.35/50 percent. The 01 July 2028 bond edged down to 9.45/65 percent from 9.50/60 percent. But the 15 December 2029 bond rose to 10.00/10 percent from 9.80/85 percent, and the 15 June 2034 bond climbed to 11.15/20 percent from 10.95/11.05 percent. The 01 October 2032 and 01 June 2033 bonds also rose.
The Public Debt Management Office sold Rs 82.09 billion of bonds at Thursday’s auction, against Rs 100 billion offered — a take-up rate of about 82 percent. All Rs 30 billion of the 01 July 2030 bonds were sold at an average yield of 10.12 percent. Rs 33.64 billion of a Rs 40 billion offer of 15 June 2034 bonds cleared at 11.16 percent, and Rs 18.45 billion of 01 July 2037 bonds at 11.19 percent. The 2030 bond is available on tap.
The market’s cautious response came despite the IMF announcing staff-level agreement on Sri Lanka’s fifth and sixth review and a $700 million disbursement subject to board approval, suggesting investors are pricing in global risks — Lebanon escalation, ceasefire fragility and the April 10 no-confidence debate — rather than domestic macro progress.
Sources: EconomyNext – Rupee & Yields, EconomyNext – Bond Auction
