Pressure mounts on Short-Term Tenures

By Paneetha Ameresekere | Published: 2:10 AM Nov 30 2021

By Paneetha Ameresekere

A combination of inflationary pressure and uncertainty continued to get the better of short-term tenures at yesterday’s Rs 30 billion Treasury T-Bond as well, while pressure on the long-term rates showed a slow, diminishing trend.

Consequently, the Weighted Average Yield (WAY) of the 2025 maturity increased by 51 basis points (bps) to 9.67 per cent, while that of the 2030 tenure declined at a decelerated pace of 28 bps to 11.63 per cent at yesterday’s auction.

Comparisons of WAYs are in relation to the previous T-Bond auction held on 11 November, where the maturities offered included the 2024 and 2031 maturities, the closest of such tenures offered when compared to yesterday’s offerings of 2025 and 2030 maturities, respectively.

 Subsequently, the Central Bank of Sri Lanka (CBSL) sold the two Rs 15 billion parcels offered for each of these maturities at yesterday’s auction.

 The interpretation of yesterday’s T-Bond auction results shows that tomorrow’s Rs 60 billion T-Bill auction will see pressure on all three maturities on offer, including that of the 91-day maturity, the anchor of CBSL’s weekly T-Bill auctions during the past 34 consecutive weeks, thereby making that auction an unlikely candidate of having its full complement sold, even by distorting the market, as was the case in the preceding six consecutive weekly auctions.

By Paneetha Ameresekere | Published: 2:10 AM Nov 30 2021

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