Central Bank suspends issuance of Treasury Bonds

Sri Lanka’s Central Bank appears to have suspended the issue of Treasury Bonds (T-bonds) since January this year owing to multiple reasons including ongoing negotiations relating to debt restructure under the International Monetary Fund (IMF)’s Extended Fund Facility (EFF) of US$2.9 billion.

No official announcement has been made of any suspension however the Business Times was alerted to this development this week when the latest calendar of Treasury Bills (T-bills) for issue in April-May 2023 was issued.

According to bankers, normally the calendar includes both T-bills and T-bonds but the calendar issued on April 28 only had the schedule for T-bills.

“I am told that although there was no formal announcement by the Central Bank of a suspension of T-bonds, this has been the case since January 2023. The reason behind this move is likely to be the ongoing negotiations on debt restructuring which would affect T-bonds as investors would be cautious to invest while a second reason would be that with interest rates likely to fall the Government may be uncomfortable to issue long tenor T-bonds at current high rates,” one banker said.

Negotiations on debt restructuring with foreign creditors are likely to end this month.

The April 28 list of scheduled T-bill auctions contained auction

dates from April 1 to May 31, 2023.

The last time T-bonds were issued was detailed by the Public Debt Department of the

Central Bank on an issuance/ settlement Calendar No. 15 of 2022, published on December 27, 2022 the tenor (term) being between two years to four years.

That gave auction dates for T-bonds from November 29, 2022 to January 12, 2023 and T-bills’ auctions from November 30, 2022 to January 25, 2023.