Medium-term yields are up as much as 30 basis points over the week as the market waits for the September 30 announcement.
Sri Lanka’s government bond yields rose on Monday, with medium-term maturities showing the largest gains this week, ahead of the Central Bank’s monetary policy announcement on September 30.
The steepest weekly rise was in the 6-year segment, where the benchmark yield climbed about 30 basis points to around 11.75%. The 5-year rose about 20 basis points to roughly 11.50%, and the 7-year rose 18 basis points to about 11.93%. The 3-year and 4-year each gained about 10 basis points. Yields at the longest end, from ten years up, were mostly unchanged, with the 10-year near 12.15%. Yields on short-term bills also edged up: the 91-day and 182-day were each up about 5 basis points on the week, to around 9.25% and 9.45%.
Trades on Monday included bonds maturing in 2030 and 2031 at 11.30%, a 2032 bond at 11.75%, and 2034 and 2035 maturities at between 11.95% and 12.10%. Foreign selling was reported during the session.
The Central Bank’s data show banking system liquidity at LKR 384.12 billion, up from LKR 370.92 billion. Foreign holdings of government securities were LKR 196.9 billion as of September 24, down 4.45% from the previous week and about LKR 16.5 billion below the September 10 level.
Business Impact
Higher yields mean higher government borrowing costs and tend to feed through into lending rates. Companies planning to raise debt, and businesses with floating-rate loans, will watch how the Central Bank responds this week. Sustained foreign selling of government securities can also put pressure on the rupee.
Key Numbers
| Maturity | Yield (approx.) | Weekly change |
|---|---|---|
| 91-day bill | 9.25% | +5 bps |
| 3-year | 10.95% | +10 bps |
| 5-year | 11.50% | +20 bps |
| 6-year | 11.75% | +30 bps |
| 7-year | 11.93% | +18 bps |
| 10-year | 12.15% | Unchanged |
Source: Central Bank of Sri Lanka statistics, Colombo Stock Exchange market data and publicly available market information.