Rs 120 B T-Bond Auction: Higher Yields Offers Fail to have Desired Impact

BY PANEETHA AMERESEKERE | Published: 2:20 AM Jul 30 2021

BY PANEETHA AMERESEKERE

Central Bank of Sri Lanka (CBSL) met with mixed success at yesterday’s Rs 120,000 million Treasury (T) Bond auction, being able to sell only 68.90 per cent (Rs 82,684 million) of the total issue, with CBSL’s higher yield offers not being enough for investors amidst rising inflationary pressure and uncertainty.

The only success was the sale of the 2024 and 2031 maturities where CBSL was able to sell the full portfolio on offer, ie Rs 30,000 million and Rs 20,000 million after increasing their maximum administered yields (MAYs) by 50 and 55 basis points (bps) each to 6.87 per cent and 8.86 per cent, respectively, compared to their MAYs or close to their MAYs fixed in previous auctions (13 July and 29 July respectively), for similar/close to such tenures. 

The weighted average yields (WAYs) fetched for the 2024 and 2031 maturities at yesterday’s auction were 6.87 per cent and 8.86 per cent, three and four bps less than their respective MAYS of 6.90 per cent and 8.90 per cent respectively. In respect of the remaning two maturities on offer, namely, the 2026 and 2028 maturities, CBSL was able to sell only 60.67 per cent (Rs 21,234 million) and 32.72 per cent (Rs 11,450 million) of their original offers which were Rs 35,000 million each, at WAYs of 7.47 per cent and 8.17 per cent, despite upping their MAYs by 14 bps to 8.20 per cent and 19 bps to 7.50 per cent, compared to the MAYs fixed for such tenures/close to such tenures, which were 7.31 per cent and 8.06 per cent, in auctions held for such tenures on 29 June and 13 July, respectively.

 It may therefore be seen that the WAYs of the 2026 and 2028 maturities at 7.47 per cent and 8.17 per cent at yesterday’s auction were three bps each less than their fixed MAYs which were 7.50 per cent and 8.20 per cent, respectively.

BY PANEETHA AMERESEKERE | Published: 2:20 AM Jul 30 2021

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