• Yield gains achieved amid increased liquidity in system
• Significant improvement in liquidity over past 1–2 weeks

Treasury bill (T-bill) yields have fallen across all maturities, clawing back part of the yield gains achieved over the past couple of weeks amidst increased liquidity in the system and unwillingness on the part of the Public Debt Management Office (PDMO) to allow yield levels to move higher. 

Speaking to The Sunday Morning Business, First Capital Holdings Chief Research and Strategy Officer Dimantha Mathew attributed the decline in yields observed at the mid-week auction largely to a significant improvement in system liquidity over the past one to two weeks, as well as lower-end bids driven by the PDMO’s reluctance in the previous week to allow yields to rise further.

“Liquidity levels have improved significantly over the last one to two weeks. We also saw an unwillingness at the previous auction to allow rates to move up further and to accept yields beyond certain levels,” he stated.

Mathew revealed that liquidity in the system had increased sharply in recent times to around Rs. 180–200 billion, up significantly from the Rs. 80–90 billion levels observed in December 2025.

According to the data published by the PDMO, it had received bids totalling Rs. 351.5 billion for the Rs. 125 billion T-bills on offer at the auction on Wednesday (21). 

Accordingly, at the auction, Rs. 40 billion from the received bids of Rs. 118.7 billion for the three-month bills had been accepted by the PDMO at a Weighted Average Yield Rate (WAYR) of 7.93%, down 2 basis points from the previous auction.

Similarly, Rs. 65 billion from the received bids of Rs. 208.6 billion for the six-month bills had been accepted by the PDMO at a WAYR of 8.36%, down 7 basis points from the previous auction.

Furthermore, Rs. 7.5 billion from the received bids of Rs. 24.1 billion for the 12-month bills had been accepted by the PDMO at a WAYR of 8.47%, down 1 basis point from the previous auction.