After upping maximum WAYs at yesterday’s T-Bill Auction: CBSL sells 69.61% of original offer

By Paneetha Ameresekere | Published: 2:00 AM Aug 6 2020

By Paneetha Ameresekere

Central Bank of Sri Lanka (CBSL) fared better at yesterday’s weekly risk-free Treasury (T) Bill auction by ‘being able’ to sell 69.61 per cent of the original offer, compared to a mere 30.29 per cent in the previous week’s auction, by inflating the administered maximum weighted average yields (WAYs) that the market can offer at yesterday’s auction after a lapse of 12 weeks.

Consequently CBSL sold Rs 24,710 million worth of

T-Bill at yesterday’s auction compared to the original offer of Rs  35,500 million at the administered maximum WAYs of 4.67 per cent, 4.76 per cent and at 4.94 per cent for the three parcels on offer, namely the 91, 182 and 364 day tenures respectively.

These maximum administered WAYs were each eight basis points more than the WAYs fetched for each of these tenures at last week’s auction.  But with all island inflation at 6.3 per cent year on year (YoY) as at June according to latest official data, there is  room for the maximum administered WAYs to increase by 163,154 and 136 bps each for the 91, 182 and 364 day maturities respectively, to prevent investors in T-Bills to get negative returns on such investments.

Investments in T-Bills and T-Bonds are considered risk free, because, in the event the Government is unable to meet such debt repayments, CBSL is mandated to print demand-pull inflationary money and repay such creditors. CBSL is the steward of GoSL debt.

By Paneetha Ameresekere | Published: 2:00 AM Aug 6 2020

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