Fixed Interest Income Earners/Savers in for a Bonanza

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By Paneetha Ameresekere

 Weighted average yields (WAYs) of the 91-day maturity zoomed by a record high of 5.59 per cent to a near 15-year high of 19.71 per cent, while the WAYs of the 182 and 364-day maturities also increased by record highs of 7.37 and 7.67 per cent to new records of 22.73 and 23.36 per cent respectively at Monday’s (11) weekly Treasury (T) Bill auction, due to sustained uncertainty.

A higher WAY than 19.71 per cent for the 91-day maturity was last seen in December 2007 when the country’s war on terrorism was at one of its ‘bitterest’, where it fetched a WAY of 21.30 per cent, while those of the 182 and 364-day maturities were at record highs of 22.73 per cent and 23.36 per cent, a first since the country originally started issuing 

T Bills to raise money from the market meet its monetary needs 98 years ago in 1924.

High WAYs percolate down to the consumers’ interest rate market, resulting in their fixed deposits/savings also fetching elevated interest income. Acceptance of higher yields also gives the impression that Central Bank of Sri Lanka (CBSL) wants to minimise money printing.

To prevent further yield pressure, CBSL the steward of Government of Sri Lanka’s (GoSL’s) debt/borrowings, sold only 93.71 per cent (Rs 81,998 million) of the original issue (Rs 87,500 million) for all three maturities at Monday’s auction.

The splits sold at Monday’s auction comprised 138.37 per cent (Rs 48,431 million) of the original issue of Rs 35,000 million offered for sale to the market of the 91-day maturity, 72.43 per cent (Rs 19,918 million) of the original issue of the 182-day maturity which was Rs 27,500 million and 54.60 per cent (Rs 13,649 million) of the original issue of Rs 25,000 million of the 364-day maturity up for sale at the auction.