WAYs rise, 152, 53 BPs at T Bond auction

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Over 20 per cent inflation, further fuelled by political uncertainty, got the better of yesterday’s Rs 35 billion Treasury (T) Bond auction, with the weighted average yields (WAYs) of the 2025 and 2027 maturities sharply rising by 152 and 53 basis points (bps) each to 23.53 and  22.69 per cent, respectively.

To curb further pressure on rates, Central Bank of Sri Lanka (CBSL) sold only 78.12 per cent (Rs 11,718 million) of the 2025 maturity compared to its original offer of Rs 15,000 million; whilst selling the full complement of Rs 20,000 million offered for the 2027 maturity, an indication that interest rate volatility in the short and medium term will continue.

Central Bank of Sri Lanka (CBSL) offered Rs 35 billion worth of the  longer tenure Treasury (T) Bonds to the market on 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.

Meanwhile, 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 WAYs of 22.01 and 22.16 per cent respectively. 

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

By Paneetha Ameresekere