• 91-day bills account for 82% of total funds raised
• Investors favour short-term bills as yields on longer tenors remain unchanged

The Government raised Rs. 65.9 billion at the weekly Treasury bill (T-bill) auction held on Wednesday (4), falling Rs. 24.1 billion short of the Rs. 90 billion on offer, despite receiving bids well above the amount on offer.

According to the Public Debt Management Office, the auction drew bids totalling Rs. 156 billion, about 1.7 times the amount offered. However, the authorities accepted only about 42% of the bids received.

The shortfall came almost entirely from the longer tenors and most of the money raised came from the shortest one. The Government accepted Rs. 53.9 billion in 91-day bills, Rs. 13.9 billion more than the Rs. 40 billion offered, from bids of Rs. 94 billion. The 91-day bill accounted for nearly 82% of the total amount raised.

The longer tenors were a different story. In the 182-day bill, Rs. 6.6 billion was accepted against an offer of Rs. 30 billion, even though bids reached Rs. 37.7 billion. In the 364-day bill, Rs. 5.4 billion was accepted against an offer of Rs. 20 billion and bids of Rs. 24.3 billion. 

Together, the two longer tenors raised just Rs. 12 billion of the Rs. 50 billion offered.

By accepting only part of the bids in these tenors, the authorities kept their yields unchanged. The weighted average yield on the 182-day bill held at 9.44%, while the 364-day bill held at 9.95%. The 91-day yield edged up by one basis point to 9.35%, from 9.34% at the previous auction.

The result follows a similar pattern at the auction held a few weeks earlier. At the 21 October auction, the Government raised Rs. 80.6 billion, falling Rs. 19.4 billion short of its target, while yields on the 182-day and 364-day bills held at 9.44% and 9.95%, respectively.

Yields have remained in this range since rising sharply mid-year. Treasury bill yields climbed across all maturities in late May, after the Central Bank of Sri Lanka raised its Overnight Policy Rate to tighten monetary conditions.