Treasury

Spot Transactions

Spot transactions are simple contracts to buy or sell currency at spot exchange rates for spot delivery normally within 2 working days.

 

Benefits

No documentation

Clients can cover exchange for receipts and payments of foreign currency.

Hedge against the currency fluctuations.

Rates are freely available from all HNB branches.

 

Forward Transactions

Forward transactions are simple contracts to buy or sell currency at Forward exchange rates for a forward value date normally more than 2 working days extending up to 12 months.

 

Requirements 

Commercial contracts involving goods and services.

Prearranged credit limits with the bank.

 


Currency SWAP Transactions





This is the exchange of one currency for another with pre-agreed dates by both parties. The initial principal amount is exchanged with the agreement to re-exchange at maturity. Both initial exchange and re-exchange rates are agreed by both parties at the beginning of the SWAP.

 

Benefits

Less documentation.

Hedge against both interest and exchange risks.

 

Export Bills Discounting

Trade bills could be cashed before the due date. The Bank will purchase the bill and pay cash to the drawer equal to the face value less interest or discount at an agreed rate for the number of days.

Requirements 

L/C bills need to comply with all terms and conditions set by the bank or with prearranged credit limits.

Benefits 

Improve cash flow

Hedge against interest and exchange risk



Treasury Bills

Treasury Bills are short term debt instruments issued by the Central Bank of Sri Lanka on behalf of the Sri Lanka Government with fixed interest rates and maturity periods of 3, 6 and 12 months and are issued at a discount. Auctions are held on weekly basis. Denominations are available in multiples of Rs.10,000/- and the CBSL may accept higher or lower amounts than the offered amount at the auction, depending on market conditions.

Treasury Bonds




Treasury Bonds are long term debt instruments issued by the Central Bank of Sri Lanka on behalf of the Sri Lanka Government with fixed interest rates and maturity periods from 2 to 30 years. Interest payments (coupon payments with fixed interest rates) are made every six months and the face value is repaid on the maturity date. Denominations are available in multiples of Rs.10,000/- and the CBSL may accept higher or lower amounts than the offered amount at the auction, depending on the market conditions.





Development Bonds



Sri Lanka Development Bonds (SLDB) are debt instruments denominated in USD, issued by the Government of Sri Lanka in terms of the Foreign Loans Act No.29 of 1957. Repayment is guaranteed by the Government. Denominations are available in multiples of USD 10,000/-. Interest is paid every six months from the date of issue. The calculation of interest payment will be based on 6 months LIBOR (London Inter-Bank Offered Rate) for USD per annum + the margin determined through competitive bidding at the auction. The principal payment will be made at the end of the maturity period. Any payments in respect of SLDBs are free from tax.
Repos and Reverse Repo



A Repo, also known as a Repurchase Agreement, is a sale of securities together with an agreement from the seller to buy back the securities at a specific date and at an agreed interest rate. The party that originally buys the securities effectively acts as a lender. The original seller effectively acts as a borrower, using the security as collateral for the secured cash loan at a fixed rate of interest. The minimum amount for a Repo investment is Rs.1,000,000/- with maturity periods ranging from overnight to 12 months.

A Reverse Repo is simply the same Repurchase Agreement from the buyer’s (the lender) view point, and the seller executing the transaction would describe it as a ‘Repo’, while the buyer in the same transaction would describe it as a ‘Reverse Repo’.



Treasury

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