364 Day Maturity Oversubscribed After 26 Months

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Yesterday’s (25) weekly Treasury (T) Bill auction for the first time after more than 26 months saw at least 100 per cent of the benchmark 364 day maturity subscribed, data showed.

Previously, i.e.  since the T Bill auction of 18 March 2020; only under 100 per cent of the 364 day maturity was allowed to be subscribed by the market by the Central Bank of Sri Lanka (CBSL), the steward of Government of Sri Lanka (GoSL) debt due to pressure on yields underlined by sustained uncertainty and high inflation.

An oversubscription of the 364 day maturity yesterday is an indication that the market feels that yields have reached its zenith, consequent to CBSL Governor Dr Nandalal Weerasinghe telling the media on Friday (20) that CBSL intervention will prevent yields from increasing further, subsequent to CBSL increasing its policy rates by 700 basis points (bps) last month.

Resultantly, 113.83 per cent (Rs 25,612 million) of the 364 day maturity, which original offer comprised Rs 22,500 million was allowed to be subscribed, from a total of Rs 46,381 million worth of offers received at a weighted average yield (WAY) of 24.30 per cent, down 20 bps week on week (WoW) to yesterday.

CBSL also allowed 133.59 per cent (Rs 60,116 million) of the 91 day maturity to be subscribed yesterday, vis-à-vis an original parcel of Rs 45,000 million offered, where its WAY fell sharply by 42 bps to 23.65 per cent and that of the 182 day maturity, however, a mere Rs 4,272 million (18.99 per cent) sold to keep a cap on yields, from a total parcel of Rs 22,500 million originally offered, consequent to which its WAY declined by 47 bps to 24.22 per cent. Subsequently, CBSL sold the totality of the Rs 90,000 million worth of all T Bill maturities originally offered to the market yesterday. 

By Paneetha Ameresekere