Treasury bill auction held on 18 March 2015

http://www.cbsl.gov.lk/pics_n_docs/latest_news/press_20150318eb.pdf

Sriranga wrote:
http://www.cbsl.gov.lk/pics_n_docs/latest_news/press_20150318eb.pdf

Thanks Sri It is good sign rates started to downward trend...

Well as we noted before it will be very unwise to not have a lower interest rate regime ( much as possible)

This is something UNP cannot/should not change refering to past regime. They ( UNP) too recognize and admit lower rates are needed for development.

The short term rate hikes happened due to government borrowing over Rs 100 billion within few weeks at rates above specified /standard and also borrowing over the advertised limit.

Unless they make an unplanned mess over the Fed issue ( https://forum.lankaninvestor.com/t4555p30-note-to-government-and-members-to-understand) the rates will never go up high as some people expect. There may not be a time of 15-20% again for a very very very long time if economy is managed well.

But to manage it well it upto the government.

Seyon wrote:
It is good sign rates started to downward trend...

The rates came down because Arjun Mahendran is on leave.

I think some clever local banker is in charge of CB now.

Now Future123 how can you say so?

Future123 wrote:The rates came down because Arjun Mahendran is on leave.

I think some clever local banker is in charge of CB now.

May Be Future123 is well know about that "some clever local banker".

slstock wrote:Now Future123  how can you say so?

Future123 wrote:The rates came down because Arjun Mahendran is on leave.

I think some clever local banker is in charge of CB now.

Future123 wrote:The rates came down because Arjun Mahendran is on leave.

I think some clever local banker is in charge of CB now.

Poor Boy...............

This is just my observation and inner feeling. Look at the bids received and accepted. Though bids received for 75 billion only 23 billion accepted. This is a good thing. If they started accepting more the interest rates will spike up.

If you had noticed that during Arjuna Mahendran's presence the TB rates continuously went up.

I also feel that if Thilak Karunaratne takes a long leave and go the market will start picking up. Don't blame me. This is just my feeling. That's it.

I was wondering whether I should make a comment on this because i am sick of seeing how the administrators managing Government Debt Financing.But anyway i'll say something  

I am not convene about the abnormal & unusual rate drop until looking at the results of the next Bill Auction. Because every body just speaks by looking at the outer look not by evaluating the real facts.

I would like to remind you that the 1Yr highest bid is also taken at 7.44% (confidential information).So weighted average of 6.99% for 1Yr Bill is very strange for me. Then some one will argue and say 6M & 3M also dropped. Yes but unfortunately i doesn't have the highest successful bids for them.

But though the CBSL is playing their own game.Market had not reacted positively for the drop in T/Bill rates, because market has fed up of all these noncence under this regime.

But PD's & Banks had lot to cry about yesterdays T/Bond auction hike. Because yesterday longer tenner Bond yields had increased by 40-50 Basis on average in the secondary markets. This is a hit of about 150Mn loss to a 10Bn portfolio (ave 4 yr Bond portfolio).

For the me all these are acts & drama for me. This Governor has made worst decision ever (to satisfy a 3rd party agendas) by starting with a 30Yr bond issue, rather than staring from a shorter tenner Bond maturities & gradually going for longer tenner by not putting pressure in the financial system & crating havoc in all the markets.

Future123 wrote:This is just my observation and inner feeling. Look at the bids received and accepted. Though bids received for 75 billion only 23 billion accepted. This is a good thing. If they started accepting more the interest rates will spike up.

If you had noticed that during Arjuna Mahendran's presence the TB rates continuously went up.

I also feel that if Thilak Karunaratne takes a long leave and go the market will start picking up. Don't blame me. This is just my feeling. That's it.

You owe a reply on another thread. Continuing to post in a similar fashion is not appreciated.

From the inception, let me say that this is not my speciality so please bear with me.

RPPA wrote:
But though the CBSL is playing their own game.Market had not reacted positively for the drop in T/Bill rates, because market has fed up of all these noncence under this regime.

Or it has been manipulated for other agendas?

For the me all these are acts & drama for me. This Governor has made worst decision ever (to satisfy a 3rd party agendas) by starting with a 30Yr bond issue, rather than staring from a shorter tenner Bond maturities & gradually going for longer tenner by not putting pressure in the financial system & crating havoc in all the markets.

Isn't the PM explained in Parliament why the Govt need such a large some of money?

Future123 wrote:This is just my observation and inner feeling. Look at the bids received and accepted. Though bids received for 75 billion only 23 billion accepted. This is a good thing. If they started accepting more the interest rates will spike up.

If you had noticed that during Arjuna Mahendran's presence the TB rates continuously went up.

I also feel that if Thilak Karunaratne takes a long leave and go the market will start picking up. Don't blame me. This is just my feeling. That's it.

TK should be there to protect small investors. All should support him to clear the whole mess and do all the changes needed to protect investors money and enact mechanisms at least to curtail wrong doings by big fellows. Specially creating the small investors association.  

Very rarely we get such people on board.

Further market didn't came down because of him.

Investor confidence was diminished with last Budget. But not all the companies liable to Super Gain Tax has come down. What are the shares that have actually came down.

1. LIOC - People expected it to perform exceptionally well in last quarter. But it gave shocking results and the hype was over. Down by 35%.

2. Most investors couldn't understood the cyclical nature of CFVF, CSEC and ESL. Down by 50% giving shock wave to most. I opened thread under the topic "Gloomy Future for Primary Dealers". It hit more than 1000 reads in first 24 hrs indicating lot of members had exposure to the particular shares. I saw lot of members blaming the Government but instead they should blame themselves. Going back to history in 2010 or 11 it went past Rs.100/- when rates were reduced. Then drop to Rs.10/50. I think this time we are more lucky.

3. CTC - It should come down as the policy frame work against tobacco industry. It trades at very high ratios unjustifiable to the uncertainty it faces.  

4. JKH - Government removed Casino option from the agreement. Price has adjusted to the range "With out Casino".

5. AEL - Another hype. This was taken to Rs.43/-. On what reasons? Connections to the Head of the Government. When the head went off, ....? I also got caught at Rs.33/- and sold at Rs.28/- for a considerable loss. The only share that I booked a loss.

But good no of shares sustained the 300 point drop.

New comers should know that we faced a 2000 point drop under previous government in 2011/12.

Sriranga wrote:
http://www.cbsl.gov.lk/pics_n_docs/latest_news/press_20150318eb.pdf

At last a silver lining.

slstock wrote:Well as we noted  before  it will be very unwise to not have a lower interest rate regime  ( much as possible)

This is something UNP cannot/should not change refering to past regime.  They  ( UNP) too recognize and admit lower rates are  needed for development.

The short term rate hikes happened   due to government borrowing over Rs 100 billion within few weeks  at rates above specified /standard and also borrowing over the  advertised limit.  

Unless they make an unplanned mess over the Fed issue ( https://forum.lankaninvestor.com/t4555p30-note-to-government-and-members-to-understand)   the rates will never  go up high as some people expect.  There may not be a time of 15-20% again  for a very very very long time if economy is managed well.

But to manage it well  it upto the government.

Seyon wrote:
It is good sign rates started to downward trend...

I think market forces should be allowed to determine the interest rates as much as possible without manipulating it. Then we will have a genuine interest rates. What we saw in Feb 27, I think was an attempted manipulation.

If rates go down further in next few weeks, Perpetual guys will book a good capital gain.

RPPA wrote:I was wondering whether I should make a comment on this because i am sick of seeing how the administrators managing Government Debt Financing.But anyway i'll say something  

I am not convene about the abnormal & unusual rate drop until looking at the results of the next Bill Auction. Because every body just speaks by looking at the outer look not by evaluating the real facts.

I would like to remind you that the 1Yr highest bid is also taken at 7.44% (confidential information).So weighted average of 6.99% for 1Yr Bill is very strange for me. Then some one will argue and say 6M & 3M also dropped. Yes but unfortunately i doesn't have the highest successful bids for them.

But though the CBSL is playing their own game.Market had not reacted positively for the drop in T/Bill rates, because market has fed up of all these noncence under this regime.

But PD's & Banks had lot to cry about yesterdays T/Bond auction hike. Because yesterday longer tenner Bond yields had increased by 40-50 Basis on average in the secondary markets. This is a hit of about 150Mn loss to a 10Bn portfolio (ave 4 yr Bond portfolio).

For the me all these are acts & drama for me. This Governor has made worst decision ever (to satisfy a 3rd party agendas) by starting with a 30Yr bond issue, rather than staring from a shorter tenner Bond maturities & gradually going for longer tenner by not putting pressure in the financial system & crating havoc in all the markets.

I suppose you would have been in the ICU during MR and Cabral period.

most interesting thing is meaning of this word "Perpetual"

Mun tika oya sellam digatama karaida?

[quote="කිත්සිරි ද සිල්වා"]From the inception, let me say that this is not my speciality so please bear with me.

RPPA wrote:
But though the CBSL is playing their own game.Market had not reacted positively for the drop in T/Bill rates, because market has fed up of all these noncence under this regime.

Or it has been manipulated for other agendas?


Isn't the PM explained in Parliament why the Govt need such a large some of money?

If the Government needs money they should have started with a shorter tenner bond (say 5Yr) at a lower cost. Why start with 30Yr Bond at a higher cost.
I don't like to sea PM who only talks. I like to see a person who work. Historically Ranil had never accepted his mistakes. He always try to protect what he has done right or wrong. Ranil has to correct himself to be a proper leader. People make mistakes.But if one understands that he made a mistake batter make it right immediately rather than trying to hide things.

Ranil is a better man than MR. No doubt about that.

RPPA wrote:

කිත්සිරි ද සිල්වා wrote:From the inception, let me say that this is not my speciality so please bear with me.

RPPA wrote:
But though the CBSL is playing their own game.Market had not reacted positively for the drop in T/Bill rates, because market has fed up of all these noncence under this regime.

Or it has been manipulated for other agendas?


Isn't the PM explained in Parliament why the Govt need such a large some of money?

If the Government needs money they should have started with a shorter tenner bond (say 5Yr) at a lower cost. Why start with 30Yr Bond at a higher cost.
I don't like to sea PM who only talks. I like to see a person who work. Historically Ranil had never accepted his mistakes. He always try to protect what he has done right or wrong. Ranil has to correct himself to be a proper leader. People make mistakes.But if one understands that he made a mistake batter make it right immediately rather than trying to hide things.

Ranil is a better man than MR. No doubt about that.  

Agreed about RW's behavior.

hariesha wrote:

RPPA wrote:I was wondering whether I should make a comment on this because i am sick of seeing how the administrators managing Government Debt Financing.But anyway i'll say something  

I am not convene about the abnormal & unusual rate drop until looking at the results of the next Bill Auction. Because every body just speaks by looking at the outer look not by evaluating the real facts.

I would like to remind you that the 1Yr highest bid is also taken at 7.44% (confidential information).So weighted average of 6.99% for 1Yr Bill is very strange for me. Then some one will argue and say 6M & 3M also dropped. Yes but unfortunately i doesn't have the highest successful bids for them.

But though the CBSL is playing their own game.Market had not reacted positively for the drop in T/Bill rates, because market has fed up of all these noncence under this regime.

But PD's & Banks had lot to cry about yesterdays T/Bond auction hike. Because yesterday longer tenner Bond yields had increased by 40-50 Basis on average in the secondary markets. This is a hit of about 150Mn loss to a 10Bn portfolio (ave 4 yr Bond portfolio).

For the me all these are acts & drama for me. This Governor has made worst decision ever (to satisfy a 3rd party agendas) by starting with a 30Yr bond issue, rather than staring from a shorter tenner Bond maturities & gradually going for longer tenner by not putting pressure in the financial system & crating havoc in all the markets.

I suppose you would have been in the ICU during MR and Cabral period.

We elected these people not to do same old things done by Cabral & MR.
MR is a real crook. I am not prepared to protect any.

As i always tell better dying as a man by telling the right thing. Rather than live like a clown.

As you wanted you will get your confirmation next week with rates falling again.

With that the market will start the run... perfectly executed script of the Mafia      

RPPA wrote:

hariesha wrote:

RPPA wrote:I was wondering whether I should make a comment on this because i am sick of seeing how the administrators managing Government Debt Financing.But anyway i'll say something  

I am not convene about the abnormal & unusual rate drop until looking at the results of the next Bill Auction. Because every body just speaks by looking at the outer look not by evaluating the real facts.

I would like to remind you that the 1Yr highest bid is also taken at 7.44% (confidential information).So weighted average of 6.99% for 1Yr Bill is very strange for me. Then some one will argue and say 6M & 3M also dropped. Yes but unfortunately i doesn't have the highest successful bids for them.

But though the CBSL is playing their own game.Market had not reacted positively for the drop in T/Bill rates, because market has fed up of all these noncence under this regime.

But PD's & Banks had lot to cry about yesterdays T/Bond auction hike. Because yesterday longer tenner Bond yields had increased by 40-50 Basis on average in the secondary markets. This is a hit of about 150Mn loss to a 10Bn portfolio (ave 4 yr Bond portfolio).

For the me all these are acts & drama for me. This Governor has made worst decision ever (to satisfy a 3rd party agendas) by starting with a 30Yr bond issue, rather than staring from a shorter tenner Bond maturities & gradually going for longer tenner by not putting pressure in the financial system & crating havoc in all the markets.

I suppose you would have been in the ICU during MR and Cabral period.

We elected these people not to do same old things done by Cabral & MR.
MR is a real crook. I am not prepared to protect any.

As i always tell better dying as a man by telling the right thing. Rather than live like a clown.

CB confident low interest rate regime will persist

http://www.ft.lk/2015/03/19/cb-confident-low-interest-rate-regime-will-persist/

The Central Bank yesterday expressed confidence that the low interest rate regime will continue despite some upward movements in certain market segments.

This view as well as other recent developments and the overall outlook for the economy has made the Central Bank keep policy rates unchanged for the 14th consecutive month following the March monetary policy review.

“Despite some upward movements in interest rates in certain market segments, the low interest rate environment is expected to continue, benefiting from the prevailing low inflation levels in the economy, thus providing an impetus to economic activity,” the Central Bank said.

Following is the full text of Central Bank statement following the March monetary policy review:
According to recently-released data by the Department of Census and Statistics, the Sri Lankan economy is estimated to have grown by 7.4% in 2014 compared to 7.2% in 2013. This growth was mainly supported by the expansion in the Industry sector, which grew by 11.4% and the Services sector, which grew by 6.5%.

Meanwhile, the Agriculture sector that was affected by adverse weather conditions, recorded a marginal growth of 0.3%.

Going forward, the economy is expected to maintain its growth momentum in 2015 amidst sustained low and stable inflation and expected improvements in business confidence.
Headline inflation, on a year-on-year (y-o-y) basis, decreased significantly to 0.6% in February 2015 from 3.2% in the previous month reflecting the downward revision of domestic fuel prices and the reduction in the prices of certain essential items announced in the Interim Budget 2015. Given the impact of such measures and supported by improved supply conditions, headline inflation is likely to remain at low levels, particularly in the first half of 2015.

Meanwhile, core inflation, which reflects underlying demand pressures in the economy, declined to 0.8%, y-o-y, in February 2015 compared to 2.1% in January 2015.

The external sector remains resilient with continued foreign currency inflows to the current account as well as to the financial account of the Balance of Payments (BOP). During the remainder of 2015, the external sector is projected to strengthen further with the expected reduction in expenditure on imports together with higher inflows on account of tourism and workers’ remittances as well as receipts to the government, the banking sector and other private corporates.

Credit obtained by the private sector from commercial banks increased by 11.5%, y-o-y, in January 2015, while in absolute terms, credit disbursements during the month amounted to Rs. 21 billion.

Credit to the private sector from commercial banks is expected to sustain its growth momentum in the period ahead benefiting from low market interest rates and increased business confidence. Supported by higher domestic credit expansion including credit granted to the government and public corporations, broad money growth was 12.6% on a y-o-y basis in January 2015.

Given signs of sustained increase in credit flows to the private sector, the Central Bank removed the restriction placed on the access to its Standing Deposit Facility (SDF) by OMO participants with effect from 02 March 2015. Following this, the overnight interest rates moved upwards and settled within the policy rate corridor closer to the lower bound.

Despite some upward movements in interest rates in certain market segments, the low interest rate environment is expected to continue, benefiting from the prevailing low inflation levels in the economy, thus providing an impetus to economic activity.
Taking the above developments in the economy into consideration, the Monetary Board at its meeting held on 17 March, was of the view that the current monetary policy stance is appropriate, and accordingly, decided to maintain the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank of Sri Lanka unchanged at 6.50% and 8.00%, respectively.
The date for the release of the next regular statement on monetary policy will be announced in due course.

sashimaal wrote:As you wanted you will get your confirmation next week with rates falling again.

With that the market will start the run... perfectly executed script of the Mafia      

RPPA wrote:

hariesha wrote:

RPPA wrote:I was wondering whether I should make a comment on this because i am sick of seeing how the administrators managing Government Debt Financing.But anyway i'll say something  

I am not convene about the abnormal & unusual rate drop until looking at the results of the next Bill Auction. Because every body just speaks by looking at the outer look not by evaluating the real facts.

I would like to remind you that the 1Yr highest bid is also taken at 7.44% (confidential information).So weighted average of 6.99% for 1Yr Bill is very strange for me. Then some one will argue and say 6M & 3M also dropped. Yes but unfortunately i doesn't have the highest successful bids for them.

But though the CBSL is playing their own game.Market had not reacted positively for the drop in T/Bill rates, because market has fed up of all these noncence under this regime.

But PD's & Banks had lot to cry about yesterdays T/Bond auction hike. Because yesterday longer tenner Bond yields had increased by 40-50 Basis on average in the secondary markets. This is a hit of about 150Mn loss to a 10Bn portfolio (ave 4 yr Bond portfolio).

For the me all these are acts & drama for me. This Governor has made worst decision ever (to satisfy a 3rd party agendas) by starting with a 30Yr bond issue, rather than staring from a shorter tenner Bond maturities & gradually going for longer tenner by not putting pressure in the financial system & crating havoc in all the markets.

I suppose you would have been in the ICU during MR and Cabral period.

We elected these people not to do same old things done by Cabral & MR.
MR is a real crook. I am not prepared to protect any.

As i always tell better dying as a man by telling the right thing. Rather than live like a clown.

I can't trust any of these puppets.But I am very worried about your money.

There is a possibility the way they have manipulated the Bond market by pushing the rates up to collect from the top. They themselves will push the rates down thorough Bill Auctions.

But remember the markets has to react for all those games. If not they have to manipulate the Bond market too.

Now who is the mafia then.

RPPA,

What is the main concern you find with this recent rate flucuations for primary dealer to conduct business? Is it the more than expected unpredictability and uncertainty in secondary markets?



1) To my thinking any primary dealer would have expected some secondary market rate change in jan-February due to $ bond payment issues . Am I right? Also due to political instability. They are wiser and more resourceful than share traders naturally. So I would have guessed some dealers may have sold some part to protect themselves in anticipation and be ready to buy at the higher rates as risk mitigation.

I do see Perpetual would have made a killing 2 ways ( selling before the rise and buying at the maybe highest). As they some how seems to have cash to meet transactions deadlines.

2) I see this goverment/CB also wants to keep rates low as possible ( primary rates) . So there is indication that we can expect rates to stalibilize if they do not keep making messes.




Note I too am very against the procedure followed by CB in the 30 yer old bond matter and then lifting the 5% rate out of a monetary policy meeting. This is not acceptable transparency. Also Perpetual deals I find fishy too. It also not they never had issues before.


See my posts
https://forum.lankaninvestor.com/t4461-cb-fiasco-and-cse-future
https://forum.lankaninvestor.com/t4555-note-to-government-and-members-to-understand


So don't think I don't agree that some irregularities have happened.
But am trying to understand the issues from dealer perspective. I saw PM also saying something like he will not dance to Primary dealer requests

slstock wrote:RPPA,

What is the main concern you find with this recent  rate  flucuations  for primary dealer  to  conduct business? Is it the more than  expected unpredictability and uncertainty in secondary markets?



1)  To my thinking   any primary dealer would have  expected some secondary market rate change in jan-February due to $ bond payment issues . Am I right? Also due to political instability. They are wiser and more resourceful than share traders naturally.  So  I would have guessed some dealers  may have sold some part to protect themselves in anticipation and be ready to buy at the higher rates as risk mitigation.  

I do see  Perpetual would have made a killing 2 ways ( selling before the rise and buying at the maybe highest).  As they some how seems to have cash to meet transactions deadlines.

2) I see this goverment/CB also wants to keep rates low as possible ( primary rates) . So there is indication that we can expect rates to stalibilize if they do not keep making messes.




Note   I too am very against the procedure followed by CB in the 30 yer old bond matter and then lifting the 5% rate   out of a monetary policy meeting. This is not acceptable transparency.   Also Perpetual  deals I find fishy too. It  also  not they never had issues before.


See my posts  
https://forum.lankaninvestor.com/t4461-cb-fiasco-and-cse-future
https://forum.lankaninvestor.com/t4555-note-to-government-and-members-to-understand


So don't think I don't agree that some irregularities have happened.
But am trying to understand  the issues from dealer perspective.  I saw PM also saying something like he will  not dance to Primary dealer requests

As you said it is uncertainty for sure. But the problem currently PDs are facing is unpredictable uncertainty. So no client is willing to take any positions. Because the big clients, foreigners & the whole market had lost faith in the Governor. Now the market had already had concluded that the Governor is a deal maker after the issue of 30 Bond & the way CBSL issued other bonds in descending order (based on maturity) rather than issuing them in a ascending order. Which is the only way the Government could have benefited. Why they could have raised the required amount of funds at lower cost.

Actually though the government has changed there was not much of a disaster in the economy.Inflation is at the rock bottom. IMF also says Sri lanka doesn't need any immediate financial support.But industry expected an interest rate increase of 0.50 max to absorb miner shocks you have pointed out nothing more. So every body started selling due to fear the rate would have sky rocketing before the elections.

By profession Mahendran is  dealer in HSBC in Singapore in the Investment Banking section. So he is a deal maker. Therefor I don't thing anybody needs rocket science to understand what he has done here.
And please note Perpetual (PP) didn't stop from 30Yr Bond. They continuously & successfully subscribed for other Bonds that came later at higher rates without any fear. So all these are pre planned deals. And now they don't care whether their Primary Dealership is cancelled. Because to get a PD license minimum capital Requirement is Rs.300Mn. And now they could have made at least 2Bn in less than 2 years.Currently half of the market players had stopped dealing with PP due to things that had taken place.And i got to know that Mr. Cabrals wife also director of PP. So this is some kind of a continuation from previous regime. And it got stronger with the appointment of Mahendran.But the previous regime had not interfered the markets.So others not effected much.

PM does not need to react for PD requests. What PDs requests is to have a true, fair & confidential bidding system with out any fevers to known parties. That is to have a fair playing field. No one request favors from any other than PP.

In my opinion for this Governer to understand to system only it will take alt least a year if not more. He is like a alien at the few meetings held. The few words he spoke are rubbish i heard from colleges.

So he should go. It is simple as that.

RPPA - can you shed some light on the private placements that happened earlier?