Dull trading haunts corp debt market

Commenting on the issue, another market analyst requesting anonymity said that majority who had invested in these debentures were banks, insurance & pension funds and unit trusts among other larger companies who want to avoid risking their investments to fluctuations in value by exposing to the market.“So, they opt not to sell because even if they choose to sell 10 percent of the investment, it affects the balance they hold because the total portfolio value will ultimately be determined by the market value,” he said.

However market liquidity and the market trading cannot take off in isolation and are closely interrelated.“The problem in our corporate debt market now is that there are enough buyers but no sellers. But I am quite certain that the trading will start soon and we are in the right direction,” Fernando confided. Since the exemption of withholding tax on interest income earned from investing in bonds and debentures listed in the Colombo Stock Exchange effective from January 01, 2013 by the budget, seven companies have issued debentures to date raising Rs.17 billion with many in the pipeline.