Govt opens TBs for foreign investors
With the objective of further widening and diversifying the
government securities market and enhancing the competition in the
Treasury Bill market, the Government opened the Rupee denominated
Treasury Bill market for foreign investors from May 6. Such measure will
not increase the government’s overall borrowing limit approved by the
Parliament with the Budget 2008.
The government opened Sri Lanka’s gilt-edged Rupee securities market
for the international market by relaxing capital controls on government
securities initially in November 2006 by allowing foreign investors to
invest in Treasury bonds.
Foreign institutional investors such as foreign country funds, mutual
funds and regional funds, corporate bodies incorporated outside Sri
Lanka and citizens of foreign states are now permitted to invest in
Accordingly, foreign investors will be permitted to invest up to 10
per cent of the value of Treasury bills outstanding at any given point
of time through the primary market.
Treasury bills can be purchased by foreign investors through
participating agents, i.e., Licensed Commercial Banks (LCBs) and Primary
Foreign investors have to advise a bank in their own country to open
a special Rupee account, i.e. Treasury Bill Investment External Rupee
Account - 2 (TIERA-2) in an LCB in Sri Lanka.
Foreign exchange brought into the country for the purchase of
Treasury bills and all proceeds received by sale or transfer or maturity
of Treasury bills are routed through this TIERA-2 account which is free
from exchange control.
Participating agents will open securities accounts for foreign
investors in the Central Depository System (CDS) maintained by the
Public Debt Department of the Central Bank of Sri Lanka (CBSL).
This account is debited/credited simultaneously based on foreign
investors trading in the market.