Perpetual Treasuries records over Rs.5bn profit from bond trading

28 September 2016 07:54 am - 21     - {{hitsCtrl.values.hits}}

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Perpetual Treasuries Limited, the controversial primary dealer connected to the family of the former Central Bank Governor, Arjuna Mahendran, has made an after-tax profit of Rs.5.1 billion for the year ended in March 31, 2016, increasing from Rs.959.5 million recorded a year ago, the financial results showed.

The performance was purely due to the Rs.5.2 billion net capital gains made by way of trading financial assets—mainly the government bonds— the financial accounts published in a weekend English newspaper showed.

The country’s bond market was hit by a series of controversial bond auctions involving allegations of rigging and insider dealing in 2015 and 2016 during the tenure of former Governor Mahendran.

This led President Maithripala Sirisena to not to extend Mahendran’s term of office and a Parliamentary inquiry is currently underway on the matter.  Under the Governorship of Mahendran the Central Bank was in the habit of accepting multiple times higher than what it offered to the primary dealers at bond auctions.

On February 27, 2015, when the Central Bank called bids to raise Rs.1 billion for 30 years but ended up accepting Rs.10 billion, of which a larger share had allegedly been purchased by Perpetual Treasuries at higher rates.

A year later on March 29, 2016 when the Central Bank called for bids to raise Rs.10 billion (2030 bond), it accepted bids up to Rs.29 billion – thrice the amount offered— at an extremely higher rate of 14.23 percent.

However, the bond yield significantly came down two days later in the secondary market, opening up an avenue for those who bought the bonds to make thumping profits by selling them.   By March 31, 2016 the Perpetual Treasuries had a whopping Rs.11.3 billion worth of government securities purchased under resale agreement against just Rs.977 million a year ago.

However, the bonds held for trading has come down to Rs.495.2 million from Rs.7.9 billion last year.

Government securities sold under repurchase agreements were Rs.5.6 billion.  The interest income of the company rose to Rs.942.8 million from Rs.359 million a year ago while the net interest income rose to Rs.353.6 million from Rs.106.1 million.

The financial accounts were signed by Perpetual Treasuries Chairman, G.J. Alosius.

The Central Bank under the Governorship of Dr.Indrajit Coomaraswamy has now made the government securities market more transparent by deciding to release such market information twice a day—at noonand close of the day.  Also, the primary dealers and commercial banks are required to trade and report inter-dealer trades on Bloomberg’s E-Bond platform.

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  Comments - 21

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  • spirit Wednesday, 28 September 2016 08:34 AM

    Ravi K is the luckiest while RW again showed his lack of capability and MS is so far so good.

    rosebud Wednesday, 28 September 2016 04:17 PM

    Mr Prime Minister-- who is to blame for this. If you are - then please present yourself at the FCID. via DM Android App

    Love Lanka Wednesday, 28 September 2016 08:40 AM

    The sad nature of Sri Lankan politics is that this will only get investigated after this Government has changed and all the Directors of the company has left the country.This Government ruined the Avant Guard business where so many ex soldiers were legally employed (Poor ex soldiers lost their lively hood, and govenment lost so much foreign exchange as a result). If there is a case against Avant Guard for making a loss to the Government, what is this?

    Citizen Wednesday, 28 September 2016 04:34 PM

    The Bond Scams are likely the biggest robbery of public funds in Sri Lankan history.

    Banji Wednesday, 28 September 2016 08:44 AM

    No action taken against former Central Bank Gov Nothing will happen Its down fall of UNP arrogance via DM iOS App

    hamza Wednesday, 28 September 2016 04:42 PM

    Where do u hang MR and the rogues for the destruction and money robbed by his family and all around him for 10 years

    Ramsay Wednesday, 28 September 2016 09:00 AM

    FCID over to you

    Missaka Wednesday, 28 September 2016 04:56 PM

    Haa haa, Horage Ammagen Pena ahanta epoo!

    gobbaya Wednesday, 28 September 2016 09:14 AM

    cronysm at its crowning peak via DM Android App

    karu Wednesday, 28 September 2016 10:29 AM

    We have heard of armed terrorists. This is the first time about finacial terrorists

    mohandev Wednesday, 28 September 2016 11:26 AM

    What arrogance? admit UNP is robbing this country, just as they did between 77-94, only nuts who comment here dont know as they are idiots

    Unchikun Wednesday, 28 September 2016 11:32 AM

    The gain of Rs 5 billion is a loss of Rs 5 billion to the people. Time to punish these fraudsters and meet the commitments of Yahapalanaya .

    asanka Wednesday, 28 September 2016 11:49 AM

    This five billion is only the profit recorded by the company. imagine, in addition to that those people who purchased these bills from the broking company may have earned more.

    shamon Wednesday, 28 September 2016 11:53 AM

    Disgusting via DM Android App

    Sharon Wednesday, 28 September 2016 11:56 AM

    Our tax money at work. via DM iOS App

    Ryan Hudson Wednesday, 28 September 2016 12:30 PM

    God bless us , its pathetic how poor people of this country suffer, guys we should all take to streets and protest until Ranil Wiockramasinge is hung to death in Galle face

    Premalal Wednesday, 28 September 2016 12:34 PM

    Now we know why we needed the IMF bale out which resulted in the VAT hike.

    Mason Wednesday, 28 September 2016 12:36 PM

    How much of this bonanza goes to those responsible to take action, but looked the other way about !

    carlafer Friday, 30 September 2016 10:40 AM

    If AM had any sense he shouldnt have accepted the post as there was an obvious conflict of interest and his son in law too should have seen this coming

    citizenPerera Wednesday, 28 September 2016 09:01 PM

    My main sadness is that this robbery was legalized by our judiciary.

    Csj Wednesday, 28 September 2016 09:02 PM

    Mr MahendranAny comments?


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