CBSL announces Rs 75B T-bond auction


Central Bank of Sri Lanka (CBSL) yesterday (8), announced a Rs 75 billion Treasury (T) Bond auction for the sale of 2025 and 2032 maturities of Rs 30 billion and Rs 45 billion in values respectively, to be held on Tuesday (13).

However, at the last T-bond auction held which was on 30 August, of the 2025 maturity offered, only 16.29 per cent
(Rs 2,443 million) of the original amount was sold to the market compared to its initial offer Rs 15,000 million, in CBSL’s bid to contain yield pressure amidst record high inflation.  Nonetheless, the weighted average yield (WAY) fetched for the 2025 maturity at this auction was 29.16 per cent, up 71 basis points (bps) compared to the WAY of 28.45 per cent fetched at the auction held prior to the 30 August auction, which was the auction held on 28 July 2022.

Meanwhile, in the T-bond auction held in the interim, i.e. in the auction of 10 August, all offers made for the 2025 maturity was rejected due to the market asking for higher yields aided by record high inflation. In related developments, at the 30 August T-bond  auction, no 2032 maturities were offered. However, the other maturity offered at the 30 August auction which was for the 2031 maturity, the WAY of that tenure rose sharply by 561 bps or by 5.61 percentage points to 29.52 per cent, compared to the WAY fetched for this maturity when it was last sold, on 28 July, where it fetched a WAY of 23.91 per cent.

CBSL is the steward of Government of Sri Lanka (GoSL) debt. Issuing of T-bonds and T-bills to the market is a popular way that GoSL raises rupees from the domestic market. Investing in T-bonds and T-bills are risk free, because in the event that GoSL is unable to honour such debt, CBSL is mandated to print demand pull inflationary money and repay such creditors. Money printing is the sole prerogative of CBSL.

By Paneetha Ameresekere