Only 51.05% of T Bill Issue Sold

By Paneetha Ameresekere | Published: 2:00 AM Sep 23 2021

By Paneetha Ameresekere 

Weighted average yields (WAYs) shot up sharply by between 30-38 basis points (bps) yesterday in Central Bank of Sri Lanka’s (CBSL’s) first weekly Treasury (T) Bill auction held after 75 weeks where it didn’t specify any maximum administered yields (MAYs). Currently, CBSL/Government of Sri Lanka (GoSL) is keeping interest rates artificially low despite inflation and uncertainty to keep GoSL’s borrowing costs low and to spur growth. 

Consequently CBSL allowed only 51.07 per cent (Rs 20,171 million) of the original issue (Rs 39,500 million) sold to the market at yesterday’s auction. WAYs for the 91 day tenure increased by 30 basis points (bps) week on week (WoW) to 6.38 per cent and that of the benchmark 364-day tenure by 38 bps to 6.50 per cent at yesterday’s auction. 

Meanwhile, the WAY fetched by the 182-day tenure was 6.27 per cent, up 32 bps over the WAY it fetched at the 1 September auction, the last time this maturity was sold to the market, with all of its bids rejected in the following two auctions held except that of yesterday’s in order to bridle rates. CBSL oversold the 91 day tenure, 198.83 per cent (Rs 19,883 million) compared to its original offer of Rs 10,000 million and undersold the other two tenures, namely the 182 and 364 day tenures, selling only 0.45 per cent (Rs 58 million) and 1.39 per cent (Rs 230 million) compared to the original parcels of Rs 13,000 million and Rs 16,500 million respectively, offered for these two tenures at yesterday’s auction. 

The oversold 91-day tenures (Rs 19,883 million) are equivalent to 98.57 per cent (Rs 20,171 million) of the total amount sold at yesterday’s auction. Meanwhile, total maturities of Rs 21,604 million worth of T Bills equivalent to 107.10 per cent (Rs 20,171 million) of yesterday’s auction sale, are due to be settled at the latest by tomorrow (Friday), with their splits being 91-day maturities Rs 14,550 million; 182-day maturities Rs 1,192 million and the benchmark 364 day maturities Rs 5,862 million, respectively, leading to a distortion where CBSL borrows ‘short’ (91-days) to pay ‘long’ (182 and 364-day maturities).

By Paneetha Ameresekere | Published: 2:00 AM Sep 23 2021

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