WAY of 2023 Maturity Up 114 BPs
By Paneetha Ameresekere
Yesterday’s Treasury (T) Bond auction for the issue of Rs 30,000 million 2023 maturities saw its weighted average yield (WAY) sharply increase by 114 basis points (bps) to 9.36 per cent compared to a WAY of 8.12 per cent fetched in the 28 September auction.
Similarly the WAY of the 2032 maturity offered at yesterday’s auction increased by 100 bps to 11.23 per cent compared with the WAY of 10.23 per cent fetched by the 2030 maturity at the 28 September auction. Meanwhile, the other maturity offered at yesterday’s auction, namely the 2027 maturity fetched a WAY of 11.14 per cent.
There was no close comparison for this WAY in the recent T Bond auctions held by Central Bank of Sri Lanka (CBSL). Nonetheless only 59.84 per cent (Rs 17,953 million) of the 2027 maturity was ultimately sold to the market at yesterday’s auction compared with its original offer of Rs 30,000 million.
In respect of the other two maturities sold yesterday, those comprised a sale of 73.8 per cent (Rs 22,140 million) compared to its original offer of the 2023 maturity, while, however, in the case of the 2032 maturity, its full complement of Rs 40,000 million offered, was sold to the market.
Despite inflation and uncertainty, CBSL/ Government of Sri Lanka (GoSL) wants to artificially maintain a low interest rate regime to minimize GoSL’s borrowing costs and also to spur growth. Consequently Rs 80,093 million (80.09 per cent) of the original offer of Rs 100,000 million for all three maturities were sold to the market at yesterday’s auction. CBSL is the steward of GoSL debt and of its foreign reserves.