Frequently Asked Questions (FAQs)

Government Debt Securities

What is Government security?

A government security is a debt instrument issued by the government with a promise of repayment upon maturity. Government securities such as Treasury bonds, Sri Lanka Development Bonds and International Sovereign Bonds promise periodic coupon or interest payments and principal at maturity. Treasury bills are issued on a discount and pay principal at maturity. In Sri Lanka, Public Debt Department of the Central Bank of Sri Lanka issues Treasury bills, Treasury bonds and Sri Lanka Development Bonds on behalf of the Government of Sri Lanka and repays maturity proceeds at maturity. These securities are considered default risk free instruments, since they are backed by the government.

What are the domestic debt securities issued by the government of Sri Lanka available for investors?

Three types of domestic debt securities issued by the Government of Sri Lanka namely;

1. Treasury bills

2. Treasury bonds

3. Sri Lanka Development Bonds (SLDBs)

What are the marketable debt instruments issued by the Government of Sri Lanka for local investors?

Treasury bills and Treasury bonds are the marketable debt instruments available for local investors.

What is a Treasury bill?

Treasury bill is a short term debt instrument issued by the Government of Sri Lanka under the Local Treasury Bill Ordinance No. 8 of 1923 (as amended) when it raises domestic public debt for budgetary purposes.

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.

What are the Main Features of Treasury bills and bonds?

a) Default risk free, gilt edged debt instrument

b) Treasury bill is a short term zero coupon debt instrument and Treasury bond is a medium to long term debt instrument.

c) Maturity proceeds (Face value) will be paid at maturity for Treasury bills and Treasury bonds carries half yearly coupon payments and the principal is repaid at maturity

d) Yield rates are determined by the market

e) Tradable instruments in the secondary market

f) Issued in scripless form

As a foreign investor can I Invest in Treasury bills and bonds?

Yes, if you are fall in to one of the following categories;

g) Foreign Institutional Investors including country funds, mutual funds or regional funds.

h) Corporate bodies incorporated outside Sri Lanka;

i) Citizens of foreign states whether resident in Sri Lanka or outside Sri Lanka.

j) Non-resident Sri Lankans.

What Benefits Can I Derive by Investing in Treasury bills and bonds?

a) 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

b) You can get the higher rate of interest since the yield rates are determined in the market.

c) Since these bills are tradable in the secondary market, you can obtain instant liquidity by selling them in the market.

d) All receipts of maturity proceeds and capital gains are fully repatriable.

e) 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.

f) 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 procedure to be followed to purchase/ sell Treasury bills /bonds and collection of proceeds?

Please refer Guidelines/ Procedures to Foreign Investors and Non- Resident Sri Lankans on the purchase and sale of Treasury bills and Treasury bonds issued by the Government of Sri Lanka bearing reference No. 08/24/031/0018/001, dated 10th April 2013.

What is a Sri Lanka Development Bond?

Sri Lanka Development Bonds (SLDBs) are debt instruments denominated in US Dollars issued by the Government of Sri Lanka in terms of the Foreign Loans Act, No.29 of 1957. Repayment is guaranteed by the Government of Sri Lanka.

What are the main features of Sri Lanka Development Bonds?

a) Semi – annual Interest Payments

b) Minimum Investment is USD 10,000 & in multiples of USD 10,000

c) Investment currency is US Dollars

d) Available in fixed and flexible (plus six months London Inter-Bank Offered Rate (LIBOR)or its successor) interest rates/coupon rates

e) Issued through competitive bidding

f) Issued in scrip form

How do I Get Information on Government Securities?

a) Details on available Government Securities and prevailing market rates can be obtained from Licensed Commercial Banks (LCBs), Primary Dealers (PDs) and CBSL Website

b) Details on current auctions can be obtained from PDs and LCBs.

c) Any detail on Government Securities can be obtained from the Public Debt Department of the CBSL.

How can local and foreign investors obtain the market details on debt securities issued by the government of Sri Lanka?

Market details can be obtained from newspapers and this website.

What are Scripless Government Securities?

Scripless government securities are securities issued in data entry form without a paper certificate.

What is LankaSecure System?

LankaSecure System means the Scripless Securities Settlement System (SSSS) and the Central Depository System (CDS) established by CBSL in terms of the Monetary Law Act., which facilitate settlement and recording of primary issues and recording of secondary market transactions of scripless securities.

What is Scripless Securities Settlement System (SSSS)?

The sripless security transactions will be settled through the electronic settlement arrangement known as SSSS. In the SSSS, settlement of securities will take place instantaneously as and when transactions take place. Whenever a transaction takes place, securities will be transferred from one account to another in the form of an electronic data entry.

What is Central Depository System (CDS)?

The Central Depository System is a computer based data base which will maintain records of holding of government securities. The CDS will maintain the accounts of System’s participants and individual accounts of each and every single holder of securities. The transfer of holdings of scripless securities is recorded electronically in the CDS according to instructions received from participants, i.e. Primary Dealers (PDs), Licensed Commercial Banks (LCBs) and any other institution permitted by the Monetary Board.

What is the relationship of investors with LankaSecure?

Investors in government securities can open and maintain accounts in LankaSecure through dealer direct participants, i.e. PDs and LCDs. All transactions relating to investors are recorded in investor accounts through their PDs and LCDs. Each investor will have a separate account in Lanka Secure. Investors can maintain their accounts under one or more dealer direct participants.

If I am an investor in government securities, do I get statements by LankaSecure?

Lanka secure will issue statements containing the following to an account holder.

a) A monthly statement confirming the transactions that took place during the month. If no transactions have taken place during the month no statement will be generated by the system.

b) Bi annual statement confirming the outstanding balance held by each investor.

c) A statement indicating the maturity proceeds and/or coupon payments whenever cash payments are made to an investor.

These statements will be issued directly to the name and address of the investor, as registered in the CDS of LankaSecure.

Can I view my LankaSecure accounts through the Internet?

Central Bank of Sri Lanka has introduced a system called LankaSecureNet enabling account holders of government securities to view details of information on their investments at any point of time through the Internet.

What is LankaSecureNet?

LankaSecureNet is an Internet based facility through which investors of government securities are able to obtain information on their transactions, interest and maturity payments and outstanding balances. This facility provides current information as well as historical information relating to investments. The participants of the LankaSettle are also benefited from this facility as the browser workstation available to them provides only historical information for five calendar days.

How do I obtain this LankaSecureNet facility?

Any investor who wishes to obtain this facility through Internet could access the system by following the steps given in the Lanka Secure Customer Information System website (https://www.cbsl.lk/lankasec/).