• Rs. 30 b accepted at mid-week auction
• First full subscription in over 6 weeks
• Indicates improved market sentiment and alignment on pricing 

Buoyed by the announcement of a ceasefire in the Middle East, the Public Debt Management Office (PDMO) successfully sold 100% of the Treasury bills (T-bills) on offer at the mid-week auction on Wednesday (8), marking the first full subscription in over six weeks.

At the preceding week’s auction, T-bill yields had risen for the third consecutive week, with short-term tenors recording double-digit increases. 

However in the lead-up to the Wednesday auction, despite yields being allowed to adjust upwards over the previous two weeks, the PDMO had been unable to fully sell the total stock of T-bills on offer due to what was described by market insiders as a mismatch between bid expectations and investor demand for a higher risk premium on Government securities.

Breaking from this trend, the latest auction saw the PDMO accept bids for the entire amount on offer, albeit at a lower volume compared to prior weeks, indicating improved market sentiment and alignment on pricing.

This marked the first T-bill auction since 18 February at which the PDMO successfully sold the entire stock of T-bills on offer.

Data released by the PDMO showed that bids totalling Rs. 59.6 billion were received at the auction held on Wednesday. 

Breaking from the recent trend of undersubscription in the primary market, the entire amount on offer, amounting to Rs. 30 billion, was accepted, reflecting a 100% acceptance rate.

At the auction, Rs. 10 billion was accepted out of Rs. 21.4 billion in bids received for three-month bills at a Weighted Average Yield Rate (WAYR) of 7.95%, marking an increase of 15 basis points from the previous auction.

Similarly, Rs. 10 billion was accepted out of Rs. 18.1 billion in bids received for six-month bills at a WAYR of 8.14%, up by 5 basis points.

Meanwhile, Rs. 10 billion was accepted out of Rs. 20.1 billion in bids received for 12-month bills at a WAYR of 8.45%, reflecting an increase of 4 basis points from the previous auction.