Colombo: Sri Lanka's central bank said it will dig into its foreign exchange reserves to part repay $1 billion of bonds maturing later this month, and seeking to allay investors' concern about a possible default.
There may be some inflows to the government coming in July, which could also be used toward the debt obligation, Governor Weligamage Don Lakshman said. The nation's reserves stood at about $4 billion, according to a central bank statement last month.
The yield on the 7.55 per cent 2030 dollar bond fell by 16 basis points to 16.27 per cent, while that on the 5.75 per cent 2023 dollar bond fell 28 basis points to 28.51 per cent. Both notes are headed for the biggest jump in about a week.
"Adequate financing strategies have been lined up to maintain reserves at sufficient levels and to meet all maturing debt servicing obligations of the government on time," the monetary authority said after keeping interest rates unchanged to support the economy's recovery. While rates were maintained despite inflation edging up toward the upper end of its 4-6 per cent target band, the central bank said it stands ready to act to keep price-growth in mid-single digits.