Sri Lanka Insurance Corporation rejects ‘false’ bond claims

• Warns of legal action as scrutiny intensifies over institutional activity in the government securities market
• Asserts its investment in 9 April 2026 auction as executed with full internal approvals and in line with established market norms
• Clarifies it deployed Rs. 6bn, where the funds were spread across three maturities, with Rs. 2bn invested in bonds maturing on 1 July 2030, Rs. 3bn in 15 June 2034 maturities, and Rs. 1bn in 1 July 2037 maturities

Sri Lanka Insurance Corporation (SLIC) yesterday pushed back strongly against allegations surrounding its participation in a recent Treasury bond auction, rejecting claims of irregular investment practices and warning of legal action as scrutiny intensifies over institutional activity in the government securities market.

The state-owned insurer said its investment in the 9 April 2026 auction, announced by the Public Debt Management Office (PDMO) on 6 April, was executed with full internal approvals and in line with established market norms, countering assertions made at a recent media briefing and on social media.

In a statement it stressed that both SLIC and SLIC Life had obtained prior approval from their respective investment committees before participating in the auction.

The insurer also sought to correct what it described as inaccuracies regarding the size and structure of the investment, stating that it had deployed Rs. 6 billion, significantly lower than the Rs. 10 billion figure being circulated publicly. The funds were spread across three maturities, with Rs. 2 billion invested in bonds maturing on 1 July 2030, Rs. 3 billion in 15 June 2034 maturities, and Rs. 1 billion in 1 July 2037 maturities.

SLIC further rejected claims that the investment had been made at a rate of 9.75 percent, clarifying that this figure refers to the coupon rate of the 2030 bond rather than the yield at which it had bid. The insurer said bidding decisions were based on prevailing secondary market rates, with yields offered above those levels to ensure allocation.

The company also dismissed allegations of an immediate Rs. 500 million loss, noting that the accounting treatment of the bonds would be governed by Sri Lanka Financial Reporting Standard 9 (SLFRS 9), and therefore such conclusions are premature.

“...the claims circulated in relation to this investment are entirely false, misleading, and malicious, and vehemently denies, rejects, and condemns such statements in their entirety,” the statement said, warning that such claims risk undermining confidence in the financial market.

SLIC said the transactions were executed through five Central Bank-appointed primary dealers, Commercial Bank of Ceylon PLC, HNB Securities Ltd, First Capital Treasuries PLC, Capital Alliance PLC and WealthTrust Securities PLC, without transaction fees, in line with market practice.

It added that participation in treasury bond auctions remains a routine investment channel for large institutional investors such as itself.

Highlighting broader implications, SLIC cautioned that the circulation of unverified claims could disrupt market sentiment at a time when confidence in the government securities market remains critical, adding that it is considering legal action against those responsible for disseminating the allegations.