{"id":42435,"date":"2015-03-18T14:06:35","date_gmt":"2015-03-18T21:06:35","guid":{"rendered":"http:\/\/www.lankaweb.com\/news\/items\/?p=42435"},"modified":"2015-03-18T14:06:35","modified_gmt":"2015-03-18T21:06:35","slug":"irregularities-in-the-30-year-treasury-bonds-issue-on-27th-february-2015","status":"publish","type":"post","link":"https:\/\/www.lankaweb.com\/news\/items\/2015\/03\/18\/irregularities-in-the-30-year-treasury-bonds-issue-on-27th-february-2015\/","title":{"rendered":"Irregularities in the 30 Year Treasury Bonds issue on 27th February 2015"},"content":{"rendered":"

Sri Lanka News<\/em><\/span><\/h2>\n
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  1. On 27th<\/sup> Feb Central Bank announced an auction for issuing 30 year Treasury Bonds for Rs. 1,000 million ( 1 Billion ). Public Debt Department of the Central Bank contacted Commercial Banks and Primary Dealers over the phone canvassing bids for the above auction around the market rate of around 9.35% and 9.75% range – which is a customary practice.<\/li>\n<\/ol>\n
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    1. Secondary market Treasury bond rates at that time were trading in the market at low yields due to excess liquidity in the\u00a0 market .\u00a0 30 year bonds also traded around 9.35% and 9.75% range and the Central Bank private placements were also done at these prevailing rates.<\/li>\n<\/ol>\n
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      1. At the abovementioned\u00a0 auction,\u00a0 Central Bank accepted bids for Rs. 10,000 million ( 10 Billion ) – ten times more<\/span> than the amount offered at a weighted average rate of 11.72%. (CB accepted bids for Rs. 10 billion at rates as high as\u00a0 3 % above the market – probably the First time in its history !!.<\/li>\n<\/ol>\n
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        1. Perpetual Investments owned by Governor\u2019s Son-in-Law, have apparently been given Rs. 5\u00a0 billion ( ie. half of the auction ), at rates going up to 12.5 %.\u00a0 Most other Banks and Primary Dealers ( except a few who may have also had an indication from other market\/CB sources )\u00a0\u00a0 bid at low rates below 11.00% due to above directions\/indications given earlier by the Public Debt Department, and the market sentiments that prevailed due to excess liquidity.<\/li>\n<\/ol>\n
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          1. In order to accommodate this, Perpetual resorted to short selling before the auction by putting dummy deals in their book<\/span>, ( The whole market knows this ) for value 6th<\/sup> March. Short selling is against the regulations and if proven can lead to the cancelation of\u00a0 a dealer license in any other market !.<\/li>\n<\/ol>\n
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            1. Accepting bids for 10 times the amount offered is highly unethical and unproductive for the government and only meant to drive the rates up<\/strong> to favor his son-in-law. Even those who work in CB knows about this and when banks called to protest, they said they are helpless.<\/li>\n<\/ol>\n
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              1. Just after the conclusion of the above auction on 27th<\/sup> February 2015 Central Bank announced a policy change removing restrictions to place excess funds of Commercial Banks at the Standing Deposit Facility of the Central Bank\u00a0 affectively increasing the overnight money market rates by around 1.00%.<\/li>\n<\/ol>\n
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                1. At the next treasury bills auction yields of all maturities of treasury bills went up by almost 1.00%. – It is the Public & the Govt of SL that will have to pay for this increase !!<\/li>\n<\/ol>\n
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                  1. Central Bank could have collected 30 year funds at a much lower rate if the auction was conducted properly and also avoided the increase in the treasury bill rates at the next auction to such an magnitude.<\/strong> Therefore this has resulted in Government paying more for long term as well as short term funds.<\/li>\n<\/ol>\n
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                    1. Everyone in the market knows that Perpetual Investments\u00a0 had prior knowledge about the\u00a0 impending behavior at the auction which is why that they bought so much at the auction and also before the auction bought from the market at low rates<\/strong>. If one inspects their books, it will be easy to establish this.<\/li>\n<\/ol>\n
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                      1. This is a 30 year bond and it is scandalous to pay 2 to 3 % higher than the market for the next 30 years making poor\u00a0 people pay for this just to enable his son-in-law to make money. \u00a0Even if he sold them back in the secondary market, he would have made a around \u00a0Rs. 300 to 500 million, in profits within a couple of hours !!<\/li>\n<\/ol>\n","protected":false},"excerpt":{"rendered":"

                        Sri Lanka News On 27th Feb Central Bank announced an auction for issuing 30 year Treasury Bonds for Rs. 1,000 million ( 1 Billion ). Public Debt Department of the Central Bank contacted Commercial Banks and Primary Dealers over the phone canvassing bids for the above auction around the market rate of around 9.35% and […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[],"class_list":["post-42435","post","type-post","status-publish","format-standard","hentry","category-forum"],"_links":{"self":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts\/42435","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/comments?post=42435"}],"version-history":[{"count":0,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts\/42435\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/media?parent=42435"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/categories?post=42435"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/tags?post=42435"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}