Treasury Bonds reach Rs. 65 b
Foreigners invest Rs. 1 billion in T- Bills:
Ravi Ladduwahetty
Foreign Funds have invested over Rs. 1 billion Treasury Bills within
10 working days following the Government decision to liberalise Treasury
Bill investments to foreigners effective May 6.
"The Government decided to open investments in Treasury Bills to
foreigners on May 6 and funds of over a billion rupees have poured in
within 10 working days," Central Bank's Superintendent of Public Debt
C.P.J. Siriwardena told Daily News Business.
The Central Bank carried out a protracted marketing campaign in the
US where road shows were held in New York, Washington and Boston where
some of the biggest American Funds were marketed with the proposals from
May 5 to 7. Some of the biggest US funds have included Goldman Sachs,
Fidelity, All Bright Capital, NWI, Invesco, Loomis and others.
Siriwardena said Sri Lanka's Treasury Bill market was an astronomical
Rs. 337 billion and what was opened to foreign investors was a mere 10
percent amounting to Rs. 34 billion.
The fact that the Sri Lankan Treasury Bill market was a mere US$
300-310 meant that this was a small market for the big time US funds and
there would be an imbalance if all of them came at the same time.
Therefore, the US investors were coming in stages, he said.
Meanwhile, in a separate development, the Central Bank which launched
the Treasury Bond in 2006 has collected Rs. 65 billion of the Rs. 110
billion which was also followed by a road show in Singapore last year.
He explained that this was also part of the liberalisation of the
economy where the Current Account was gradually opened and this was a
process of gradually opening the Capital Account.
Safeguards were also placed to ensure that there is no imbalance in
the market when the US funds pulled out their investments at the time of
maturity.
Quoting an example, he said that foreign investors had to operate
through a local bank and convert the dollars into rupees as the Treasury
Bills had to be bought in rupees. The local bank which returned the
dollars to the investors at the time of maturity, had to sell 50% of the
proceeds to the Central Bank into a special account in dollars to the
Central Bank which also will ensure that there is no shortage of dollars
in the market.
The Central Bank will release the dollars into the local market in
the event of there being a shortage, he said.
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