- Yields rise across all three maturities
- Auction oversubscribed 2.51 times
- Move coincides with CBSL decision to hold policy rate at 8.75%
Treasury bill (T-bill) yields rose across all three maturities at last week’s auction, extending their gains for a third consecutive week, as the auction coincided with the Central Bank of Sri Lanka’s (CBSL) decision to maintain its policy rate at 8.75%.
Data published by the Public Debt Management Office (PDMO) revealed that bids totalling Rs. 201.2 billion had been received at the auction held on Wednesday (30 September) against Rs. 80 billion on offer, with the PDMO accepting the full Rs. 80 billion, leaving the auction oversubscribed by 2.51 times.
The three-month T-bill rose by 5 basis points to a Weighted Average Yield Rate (WAYR) of 9.25%, the six-month by 4 basis points to 9.41%, and the 12-month by 2 basis points to 9.95%.
The across-the-board increase marked a third consecutive week of gains across all three maturities, with the 12-month rate now approaching the 10% level.
The auction followed the decision of the CBSL, at its Monetary Policy Review held on Wednesday, to maintain its Overnight Policy Rate (OPR) at 8.75%.
The Central Bank stated that it had arrived at the decision after considering evolving domestic and global economic conditions, including the impact of the monetary policy tightening undertaken in May, as well as the uncertainty stemming from geopolitical tensions in the Middle East and the potential economic risks associated with El Niño conditions.
The CBSL further noted that headline inflation had risen to 8% in August and was expected to remain in the high single digits through the first quarter of 2027 before gradually easing towards its 5% target. It added that the economy had remained resilient in the first half of 2026, recording real year-on-year growth of 4.7%.
According to the Daily Economic Indicators published by the CBSL, overnight market liquidity stood at Rs. 151.35 billion as of Tuesday (29 September), up substantially from Rs. 94.09 billion a week earlier on 22 September.
During last week’s auction, bids worth Rs. 92.1 billion were received for three-month bills against Rs. 35 billion on offer, with Rs. 41.87 billion accepted at a WAYR of 9.25%, up 5 basis points from the previous auction.
Similarly, Rs. 73.85 billion in bids was received for six-month bills against Rs. 25 billion on offer, with Rs. 28.91 billion accepted at a WAYR of 9.41%, up 4 basis points from the previous auction.
Meanwhile, Rs. 35.23 billion in bids was received for 12-month bills against Rs. 20 billion on offer, with Rs. 9.22 billion accepted at a WAYR of 9.95%, up 2 basis points from the previous auction.
While the total amount accepted matched the Rs. 80 billion on offer, the PDMO skewed its acceptances towards the three-month and six-month maturities, accepting above the offered amounts for both, while accepting well below the offer for the 12-month, at Rs. 9.22 billion against the Rs. 20 billion offered.