• Extends upward correction for 2nd consecutive week
• Demand recovers following previous week’s dip
• Bids totalling Rs. 171.6 b received against Rs. 70 b on offer; PDMO accepts full Rs. 70 b

Treasury bill (T-bill) yields rose across all three maturities at last week’s auction, extending an upward correction for a second consecutive week as demand recovered following the previous week’s dip.

Data published by the Public Debt Management Office (PDMO) revealed that bids totalling Rs. 171.6 billion had been received at the auction held on Wednesday (16) against Rs. 70 billion on offer, with the PDMO accepting the full Rs. 70 billion, leaving the auction oversubscribed by 2.45 times. 

The volume of bids received at last week’s auction recovered from the Rs. 149.2 billion received at the previous auction, when demand had eased ahead of a Treasury bond auction.

The three-month T-bill rose by 15 basis points to a Weighted Average Yield Rate (WAYR) of 9.18%, the six-month by 12 basis points to 9.36%, and the 12-month by 11 basis points to 9.88%.

The broad-based increase marked a second consecutive week of rising yields, extending the correction that had begun the previous week, where the three-month rate had moved higher. 

This increase in rates amounts to a trend reversal following a sustained run of declines that had, at their trough, brought all three maturities below the 10% level and the three-month rate below 9%.

The rise came as the economy showed signs of a slowdown. 

According to the Daily Economic Indicators published by the Central Bank of Sri Lanka (CBSL), real GDP growth eased to 4.2% in the second quarter of 2026, from 5.1% in the first quarter. Inflation, meanwhile, remained elevated, with the Year-on-Year (YoY) change in the Colombo Consumer Price Index (CCPI) at 8% in August this year.

Overnight market liquidity stood at Rs. 92.55 billion as of Tuesday (15), down from Rs. 131.40 billion the previous day and from Rs. 119.80 billion a week earlier on 8 September, pointing to some tightening in market liquidity.

During last week’s auction, bids worth Rs. 63.41 billion were received for three-month bills against Rs. 25 billion on offer, with the full Rs. 25 billion accepted at a WAYR of 9.18%, up 15 basis points from the previous auction.

Similarly, Rs. 53.83 billion in bids was received for six-month bills against Rs. 25 billion on offer, with the full Rs. 25 billion accepted at a WAYR of 9.36%, up 12 basis points from the previous auction.

Meanwhile, Rs. 54.36 billion in bids was received for 12-month bills against Rs. 20 billion on offer, with the full Rs. 20 billion accepted at a WAYR of 9.88%, up 11 basis points from the previous auction.

The offering was reduced further to Rs. 70 billion from Rs. 80 billion, with the three-month offering lowered to Rs. 25 billion. The PDMO accepted exactly the amount offered under each maturity.