Rs 35B T Bonds to be issued

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Central Bank of Sri Lanka (CBSL) is offering Rs 35 billion worth of the  longer tenure Treasury (T) Bonds to the market tomorrow (Thursday, 12 May) in the backdrop that yields of the shorter tenure T Bills are fetching record weighted average yields (WAYs) of over 20 per cent.

High yields are complemented by rising inflationary pressure despite an over 20 per cent inflation rate currently, coupled with political uncertainty.

Further, tomorrow’s T Bond auction is being held in the backdrop that in the immediately preceding days, that is, today, CBSL will be holding an auction for the issuance of Rs 92.5 billion worth of T Bills, creating the background for further yield pressure due to the Government of
Sri Lanka’s (GoSL’s) huge borrowing appetite.

Meanwhile, the splits of tomorrow’s T Bond auction are Rs 15 billion worth of 2025 maturities and Rs 20 billion 2027 maturities.

In the immediately preceding T Bond auction held a fortnight ago on 28 April, at that time too for the issuance of a total of Rs 35 billion worth of T Bonds, where, however, the splits were different, with the splits comprising Rs 20 billion worth of 2025 maturities and Rs 15 billion 2027 maturities, those fetched weighted average yields (WAYs) of 22.01 and 22.16 per cent.

To contain further yield pressure, CBSL sold only
Rs 13,108 million (65.54 per cent) of the 2025 maturity at the 28 April auction, though having sold the full complement (Rs 15 billion) worth of the 2027 maturity offered to the market, then. CBSL is the steward of GoSL debt.

By Paneetha Ameresekere