Sri Lanka Treasury Bond Calculator (YTM, Coupons & Cashflows)

A Treasury Bond is a fixed-coupon instrument issued by the Government of Sri Lanka through the Central Bank's Public Debt Department. Each bond pays a fixed annual coupon, split into two equal semi-annual payments, and redeems the face value on the maturity date. The CBSL convention follows Local Treasury Bonds Ordinance §4 and the ISMA Rule 251 day-count basis (ACT/ACT-ICMA).

1. Coupon schedule. Coupons fall on the same day-of-month as the maturity date and six months earlier, walking backwards to the issue date. Each coupon equals face × coupon-rate / 2.
2. Accrued interest (ACT/ACT-ICMA). The buyer compensates the seller for the coupon period already elapsed at settlement:

   AI = coupon × days(prev → settlement) / days(prev → next)

   On a settlement that falls exactly on a coupon date, AI is zero (ex-coupon). The day count is whatever the calendar actually says, no 30/360 simplification.
3. Dirty price. The rupees you actually pay on settlement:

   Dirty = (clean / 100) × face + accrued

   Dealers quote clean (the price excluding accrued); the dirty price is what hits your CDS account.
4. Yield to Maturity (YTM). Find the semi-annual rate y that makes the present value of every remaining coupon plus the redemption equal the dirty price:

   Dirty = Σ Cᵢ / (1 + y)^tᵢ + Face / (1 + y)^tᴺ
      tᵢ = w + (i − 1)
      w  = days(settlement → next) / days(prev → next)

   The exponent w is the stub fraction for the partial first period (ACT/ACT-ICMA); the rest of the periods are integer-spaced. There is no closed-form solution. The calculator uses a bisection solver on the interval y ∈ [−0.5, 2.0] (i.e. −100% to +400% BEY) to a tolerance of 1e-10. Because the PV is strictly monotone in y for plain-vanilla bonds, bisection always converges.
5. Reporting conventions. Bond-equivalent yield (BEY) is 2·y, the figure CBSL and primary dealers quote. Effective annual yield (EAY) compounds that to one year: (1 + y)² − 1. Current yield is the annual coupon divided by the clean price-as-fraction-of-face, useful for income-only comparisons but ignores any pull to par from a discount/premium price.

Nothing is withheld from a Treasury Bond coupon. Section 84(3)(d) of the Inland Revenue Act takes interest or discount on a Treasury Bond outside both withholding tax and Advance Income Tax, for any holder, so coupons are paid gross. That is the main tax difference against a fixed deposit, where 10% Advance Income Tax comes off the interest at source. The coupon is still assessable income you declare at your own rate, so the tax toggle in the calculator takes a rate you enter rather than a statutory one, and applies it to each coupon row in the cashflow table. The redemption of principal at maturity is a return of capital and is not taxed.

The calculator also runs a cross-check: it re-prices the bond at the solved YTM and confirms the result matches the dirty price to within one cent. A “cross-check ✓” tag appears next to the YTM tile when the math reconciles. Day-count: ACT/ACT-ICMA.

• CBSL: Public Debt Department, Government Securities (issuance & convention)
• Local Treasury Bonds Ordinance (Cap. 420): legal basis for semi-annual coupons
• Inland Revenue Act No. 24 of 2017, consolidated to 31.03.2025: s.84(3)(d) excludes Treasury Bond interest from withholding tax and AIT; s.84A(1A); s.88(1A)
• Capital Alliance (primary dealer): tax comparison showing no WHT on T-Bond coupon income, against 10% on fixed deposits
• ICMA: Rule 251 (ACT/ACT-ICMA day-count convention)

Formulas, day-count basis, and the tax treatment of coupons on this page were last cross-checked against the CBSL Public Debt Department and the consolidated Inland Revenue Act on 2026-10-17. Tax rules can change at each budget, so treat the position above as current-day guidance only and re-check the Act before relying on a tax projection.