• Extend upward climb for 2nd consecutive week amid comparative dip in liquidity
• Auction oversubscribed by 2.41 times



Treasury bill (T-bill) yields advanced across all three maturities at last week’s auction, extending their upward climb for a second consecutive week amidst a comparative dip in liquidity. 

Data published by the Public Debt Management Office (PDMO) revealed that bids totalling Rs. 144.6 billion had been received at the auction held on Wednesday (23) against Rs. 60 billion on offer, with the PDMO accepting the full Rs. 60 billion, leaving the auction oversubscribed by 2.41 times. 

The three-month T-bill rose by 2 basis points to a Weighted Average Yield Rate (WAYR) of 9.2%, the six-month by 1 basis point to 9.37%, and the 12-month by 5 basis points to 9.93%.

The across-the-board increase marked a second consecutive week of gains across all three maturities, extending the upward correction that has taken hold since the market’s extended downward run came to an end, with the 12-month rate now edging back towards the 10% level.

The rise came against a backdrop of accelerating inflation and a slowing economy. 

According to the Daily Economic Indicators published by the Central Bank of Sri Lanka (CBSL), the year-on-year change in the Colombo Consumer Price Index (CCPI) stood at 8% in August, while the National Consumer Price Index (NCPI) rose to 8.1% in the same month, up from 7.2% in July. 

Meanwhile, real GDP growth had eased to 4.2% in the second quarter of 2026, from 5.1% in the first quarter. 

Overnight market liquidity stood at Rs. 94.09 billion as of Tuesday (22), down from Rs. 145.72 billion the previous day and broadly in line with the Rs. 92.55 billion recorded a week earlier on 15 September.

During last week’s auction, bids worth Rs. 58.15 billion were received for three-month bills against Rs. 20 billion on offer, with Rs. 30.12 billion accepted at a WAYR of 9.2%, up 2 basis points from the previous auction.

Similarly, Rs. 52.40 billion in bids was received for six-month bills against Rs. 25 billion on offer, with Rs. 19.52 billion accepted at a WAYR of 9.37%, up 1 basis point from the previous auction.

Meanwhile, Rs. 34.01 billion in bids was received for 12-month bills against Rs. 15 billion on offer, with Rs. 10.36 billion accepted at a WAYR of 9.93%, up 5 basis points from the previous auction.

While the total amount accepted matched the Rs. 60 billion on offer, the PDMO skewed its acceptances towards the three-month maturity, accepting Rs. 30.12 billion against the Rs. 20 billion offered, while accepting below the offered amounts for the six-month and 12-month bills.

According to Capital Trust Securities, for an investor with a taxable income in excess of Rs. 3.7 million per annum, subject to income tax at 36%, the tax-adjusted effective yields worked out to 5.89% on the three-month bill, 6% on the six-month, and 6.36% on the 12-month.