3-member committee to probe CB bond fiasco

Tuesday, 10 March 2015 01:30 - - {{hitsCtrl.values.hits}}

Days after the fiasco over the Central Bank’s Rs. 1 billion Treasury bond issue and other developments, President Maithripala Sirisena yesterday decided to appoint a three-member committee to investigate alleged irregularities. In a statement the President’s Media Division briefly said that the President, who is in UK, has ordered the President’s Secretary to appoint a three-member committee to investigate this issue. The statement further added that President Sirisena had instructed this committee to take strict legal action based on investigations against those who were found guilty regardless of their positions. The three persons are yet to be identified and appointed. The issuance of a Rs. 1 billion 30-year Treasury bond last week has drawn widespread flack after the Central Bank decided to accept bids to the tune of Rs. 10 billion at higher yield. A reason to go for a higher amount was urgent cash needed by the Government to honour commitment on road development which had been overlooked by the previous regime. The other reason is the debt market alleging that at least one primary dealer with connections to the CB Chief knew in advance that the amount to be raised would be increased hence it submitting bids much higher than the offered amount and thereby profiteering from the issuance. Allegations ranged from early insider information as well as misleading the debt market and Central Bank borrowing at a relatively higher cost. However, the Ministry of Policy Planning and Economic Affairs on Friday justified the bond issuance and the yield though it stopped short of responding to alleged insider dealing and primary dealer profiteering. Analysts said that with President Sirisena’s decision to appoint an independent and competent 3-member Committee the actual situation would emerge. The move also puts the integrity of Central Bank Governor Arjuna Mahendran in the balance. Mahendran was handpicked by Prime Minister Ranil Wickremesinghe for the CB Chief post amidst some reservations by coalition partners of the Interim National Government.

$ 50 m Sri Lanka Development Bonds issue oversubscribed 3.5 times

The issue of Sri Lanka Development Bonds (SLDBs) for $ 50 million for 3-year tenor has been oversubscribed by 3.5 times with total bid received amounting to $ 172.5 million the Central Bank said on Monday. Following the bidding the Central Bank has accepted $ 156.5 million in three-year maturity at the market determined rates of US Dollar 6 month LIBOR + 377 bps weighted average margin, the bank said in a statement. The offer was opened from 2-9 March 2015 for bidding with the settlement on 16 March 2015. All bids received were for the floating rate option. Following the bidding the Central Bank has accepted $ 156.5 million in three-year maturity at the market determined rates of US Dollar 6 month LIBOR + 377 bps weighted average margin, the bank said in a statement.