Sri Lanka Development Bonds US$100mn auction announced | Sinhala News

ECONOMYNEXT – A 100 million tranche of US dollar denominated Sri Lanka Development Bond styled bonds are offered to US dollar holders including exporters at an auction which will close on January 20, the central bank said.

“The minimum investment at the auction shall be US Dollars 10,000. Denominations are available in multiples of US Dollars 10,000. In the secondary market the minimum investment shall be US Dollars 10,000,” the central bank said in the offer document.

The central bank offered SLDBs though the tenures of 5 months, 9 months, 1 year 2 months, 2 years 3-months, and 4 years and 6 months. The central bank did not mention the amount it was seeking via each tenure of the bond.

The 100 million auction could be upsized 1.5 times.

The date of settlement is 24 January.

On January 22, 244 million US dollars of Sri Lanka Development Bonds are maturing.

Sri Lanka’s central bank has earlier allowed exporters of goods and services to invest up to 10 percent of their dollar proceeds in Sri Lanka Development Bonds, a dollar denominated security offered by the government of Sri Lanka.

The central bank later brought a rule barring residents who earn dollars abroad from keeping them in foreign exchange accounts, depriving banks of potential deposits to buy Sri Lanka Development Bonds and discouraging saving.

When the receivers are forced to convert into rupees and spend the money, and more imports come in.

In order for the government to get hold of the converted dollars it will have to sell rupee Treasuries and try to buy dollars in the market, but due to sterilized dollar sales, Sri Lanka now has a dollar shortfall for imports.

Analysts has said forced conversions will make is a cascading policy error.

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