Capital Alliance

What is a Treasury Bond?
Treasury Bond is a medium and long term debt instrument issued by the Government of Sri Lanka under the Registered Stock and Securities Ordinance No. 7 of 1937 (as amended) when it raises domestic public debt for budgetary purposes.

Who Issues Treasury Bonds?
As an Agent of the Government of Sri Lanka, the Public Debt Department of the Central Bank of Sri Lanka (CBSL) issues the Treasury bonds, pays interest on due dates and repays the principal on maturity.

Authority to Issue Treasury Bonds
In terms of annual borrowing targets specified in the Appropriation Act which is approved by the Parliament annually, the Government of Sri Lanka is authorized to issue Treasury bonds.

Obligations of the Central Bank of Sri Lanka
The obligation of the CBSL is to raise domestic debt, pay interest on due dates and repay the principal on the due date. These functions are being attended by the CBSL through the Public Debt Department.

It is an absolutely risk free investment, since it is issued by the sovereign government. Hence, they are called gilt-edged securities meaning that they are covered by gold.
You can get the highest rate of interest since the yield rates are determined in the market.
Since these bonds are tradable in the secondary market, you can obtain instant liquidity by selling them in the market.
All receipts of interest and maturity proceeds are fully repatriable.
You could also have a joint investment with some other person or persons. Hence, it is a very good way to share your investments with loved persons.
You are not subject to further taxation, since a withholding tax of 10 percent is charged at source.
No stamp duty is payable on these bonds.
You can get the best service from the CBSL which maintains your investment in its state of the art, Scripless Security Settlement System and the fully automated Central Depository System (CDS).

What is the Availability of Treasury Bonds?
Foreign investors can purchase up to 10 % of the total outstanding Treasury bonds at any given time. Eg. As at November 30, 2007, Treasury bond outstanding stock was Rs. 1053 bn. Accordingly, Rs. 105.3 bn. is available for foreign investors.

What Types of Treasury Bonds Foreign Investors Can Purchase?
Eligible foreign investors are permitted to purchase, sell or transfer Treasury bonds with any maturity period.

You can purchase Treasury bonds at any time through Primary Dealers (PDs) or Licensed Commercial Banks (LCBs) registered with the CBSL. PDs are the institutions appointed by the CBSL for trading in Government securities. Contact details of these institutions are given below.
You can purchase Treasury bonds from the secondary market or you can even send bids to the primary auctions through PDs.
In order to make arrangement for fund transfers, you can advise your own bank to open a Rupee account named "Treasury bond Investment External Rupee Account (TIERA)" in an LCB in Sri Lanka.
After completing the transaction, your agent (LCB/PD) will open a security account for you in the CDS maintained by the CBSL. This account is debited /credited simultaneously based on your tradings in the market.

How Can I Collect Interest and Maturity Proceeds?
Interest and maturity proceeds relating to Treasury bonds are credited on due dates directly to your account through your agent. The participants of the CDS are responsible to pay dues to you on due dates.

Details on available Treasury bonds and prevailing market rates can be obtained from LCBs, PDs and CBSL Website (www/cbsl.gov.lk)
Details on current auctions can be obtained from PDs and LCBs.
Any detail on this scheme can be obtained from the Public Debt Department of the CBSL.