CBSL offers T-Bonds totalling Rs 120 B

BY PANEETHA AMERESEKERE | Published: 2:10 AM Jul 28 2021

BY PANEETHA AMERESEKERE

Central Bank of Sri Lanka (CBSL) after a lapse of five months is holding a Treasury TBond auction tomorrow (Thursday), where the total amount offered is over Rs 100 billion. The offers for tomorrow’s auction total Rs 120 billion, marginally less than the offer of Rs 125 billion made to the market five months ago at a T-Bond auction held on 19 February.

 In between, all the T-Bond auctions held were for offers totalling less than Rs 100 billion. Cognisant of inflationary pressure on yields, CBSL has upped the maximum administered yields (MAYs) for tomorrow’s T-Bond auction, with the MAY for the 2028 maturity on offer up 14 basis points (bps) to 8.20 per cent compared to the MAY of 8.06 per cent fixed at the 13 July 2021 T-Bond auction. Prior to tomorrow’s T Bond auction, the last time that CBSL conducted a T-Bond auction was on 13 July. 

The amount of 2028 maturities on offer at tomorrow’s auction is Rs 35 billion. The other maturities on offer at tomorrow’s T-Bond auction are Rs 30 billion worth of 2024 maturities at a MAY of 6.90 per cent, Rs 35 billion 2026 maturities at a MAY of 7.50 per cent and Rs 20 billion 2031 maturities at a MAY of 8.90 per cent, respectively.

 The closest to the 2024 maturity that CBSL last offered to the market was the 2023 maturity at the 13 July auction which MAY was fixed at 6.40 per cent. It may therefore be seen that the MAY offered for the 2024 maturity at 6.90 per cent at tomorrow’s auction is 50 bps (half-a-per cent) more than the MAY that had been fixed for the 2023 maturity at the 13 July auction which was 6.40 per cent.

 In related developments, the last time that CBSL conducted an auction where the MAY fixed for the 2026 maturity at tomorrow’s auction at 7.50 per cent was closest to it was for an auction for the issuance of 2025 maturities, where the MAY fixed for it was 7.31 per cent. That auction was held on 29 June. Therefore, the MAY of 7.50 per cent fixed for the 2026 maturity at 7.50 per cent at tomorrow’s auction is 19 bps more than the MAY that had been fixed for the 2025 maturity at the 29 June auction which was 7.31 per cent. 

Similarly, the last time that CBSL held an auction closest the 2031 maturity on offer at tomorrow’s auction was for the auction for the issuance of 2032 maturities where the MAY fixed was 8.45 per cent. That auction was held on 29 April 2021. Therefore, the MAY of 8.90 per cent fixed for the 2031 maturity at tomorrow’s auction is 55 bps more than that had been fixed for the 2032 maturity at the 29 April auction, which was 8.45 per cent. CBSL/Government of Sri Lanka (GoSL) want to maintain an artificially low interest rate regime despite inflationary pressure in order to spur growth. CBSL is the steward of GoSL debt.

BY PANEETHA AMERESEKERE | Published: 2:10 AM Jul 28 2021

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