Zero uptake for 2032 bond

Tepid demand for 2035 issue

Sri Lanka’s bond auction on August 12, 2025 sent a stark warning to policymakers: despite macroeconomic stabilisation under IMF reforms as deep-seated investor skepticism remains.

The Central Bank of Sri Lanka (CBSL) sought to raise LKR 65 billion through bonds maturing in 2032 and 2035, but the market delivered a brutal verdict – zero uptake for the 2032 bond and tepid demand for the 2035 issue, leaving the auction LKR 46.5 billion short of its target.

Here is a summary of the bond market operations.

2032 Bond (8% coupon): Fully rejected, signaling investors see the return as inadequate for Sri Lanka’s lingering default risks and inflation.

2035 Bond (10.7% coupon): Only 74% of target met, underscoring persistent doubts over long-term debt sustainability, policy clarity and economic reforms.

“The bond market is flashing red,” a debt market analyst told the Island Financial Review on condition of anonymity. “Investors are saying, ‘Show us real progress on debt restructuring and economic reforms before we commit.”

“While short-term bonds (2027-2029) traded at 8.50%-9.39%, yields on longer-dated debt (2030-2032) climbed to 9.45%-10.25% which was a clear risk premium. Overnight liquidity also tightened to LKR 97.89 billion, hinting at growing caution. The rupee inched up to LKR 300.67/USD. Yet, traders appear to think that stability is fragile. In this context, if bond auctions keep failing, pressure on the currency will return,” he cautioned.

When asked what could be done to make the bond market more attractive for investors, he replied, “The Central Bank may be forced to sweeten terms, risking a reversal of recent rate cuts which will push borrowing costs higher though. Sri Lanka’s economy is stabilising, but the bond market’s cold shoulder reveals a harsh truth – investors still don’t trust the recovery. Without faster debt solutions and critical economic reforms, the Central Bank’s Road ahead would just get rougher,” he opined.

By Sanath Nanayakkare

Nations Trust Bank PLC reported strong results for the six months ending 30th June 2025, achieving a Profit After Tax (PAT) of LKR 9Bn, reflecting a healthy 10% year-on-year growth.

Nations Trust Bank, Director & Chief Executive Officer, Hemantha D Gunetilleke, stated, “The Bank’s performance in 1H 2025 highlights our commitment to economic growth and credit expansion across customer segments. Loans to our customers grew by LKR74Bn, a 26% increase in the first 6 months, highlighting the bank’s contribution to supporting business growth and economic revival. Our solid capital position, strong liquidity buffers and steadfast commitment to service excellence and digital empowerment remain as our key drivers of financial performance”

The Bank’s profitability was further supported by a Net Interest Margin (NIM) of 6.37%, reflecting efficient asset-liability management and prudent pricing strategies. The Bank reported a Return on Equity (ROE) of 21.25%, while its Earnings Per Share for the six months ending 30th June 2025 increased to LKR 26.59, against LKR 24.27 recorded during the same period last year.

Asset quality remained sound, with the Net Stage 3 Ratio contained at 1.24%, underscoring effective credit risk management.

Capital strength continued to be the foundation of our growth readiness, with Tier I Capital at 17.12% and a Total Capital Adequacy Ratio of 18.24%, well above the regulatory requirements of 8.5% and 12.5%, respectively.

With strong financial fundamentals, consistent growth, and a focus on innovation, Nations Trust Bank remains committed to delivering on its promise of ‘Trust in Better’ while delivering better experience to its customers.

Nations Trust Bank PLC serves a diverse range of customers across Consumer, Commercial and Corporate segments through multi-channel customer touch points spanning both physical and digital. The Bank continues to focus on digital empowerment through cutting-edge digital banking technologies and platforms. Nations Trust Bank PLC is an issuer and sole acquirer of American Express Cards in Sri Lanka with market leadership in the premium segments.

In its continued efforts to deliver excellence and sophistication in customer experience, NDB Bank recently hosted an exclusive engagement event for its Privilege clientele of Havelock Town Branch, coinciding with the opening of the newly refurbished NDB Privilege Centre at the Havelock Town Branch. The event marked yet another milestone in the Bank’s journey of elevating service standards and offering refined, personalised banking environments for its high-net-worth customers.

The newly enhanced Privilege Centre is designed to reflect the evolving expectations of the Bank’s most discerning clients, offering greater privacy, comfort, and convenience in an environment curated for focused financial advisory and bespoke banking solutions. This initiative is part of NDB’s broader commitment to continuously invest in infrastructure and experiences that align with its clients’ lifestyles and aspirations.

The exclusive event brought together select members of the Bank’s Privilege segment, offering them the opportunity to explore the upgraded space while engaging with senior bank representatives in a relaxed and elegant setting. The evening was not only a celebration of the Centre’s reopening but also a reaffirmation of NDB’s dedication to fostering meaningful relationships with its valued clients.

Speaking on the occasion, Kelum Edirisinghe, CEO of NDB Bank stated, “At NDB, our Privilege Banking offering is built around understanding and anticipating the needs of our clients. The new PRV Centre at Havelock Town is more than a space, it’s a statement of the standards we uphold and the experience we promise. This event marks our commitment to continue evolving with our customers.”

NDB Privilege Banking continues to stand as a benchmark in personalised financial service, offering a suite of tailored banking, investment, and lifestyle benefits. Through continuous enhancements in service delivery, relationship management, and customer engagement, NDB remains a trusted partner in every moment that matters.

NDB Bank is the fourth-largest listed commercial bank in Sri Lanka. NDB was named Sri Lanka’s Best Bank for Corporates at Euromoney Awards for Excellence 2024 and was awarded Domestic Retail Bank of the Year – Sri Lanka and Sri Lanka Domestic Project Finance Bank of the Year by Asian Banking and Finance Magazine (Singapore) Awards 2024. NDB is the parent company of the NDB Group, comprising capital market subsidiary companies, together forming a unique banking and capital market services group. The Bank is committed to empowering the nation and its people through meaningful financial and advisory services powered by digital banking solutions.