Rs 45B T Bill Auction 5-in-a-row failure

By Paneetha Ameresekere | Published: 2:00 AM Apr 8 2021

By Paneetha Ameresekere

Yesterday’s weekly risk-free Treasury (T) Bill primary auction for the sale of Rs 45 billion Treasuries was a 5-in-a-row failure led by the ‘long term’ 364-day and the ‘medium’ term 182 day maturities, where only 1% (Rs 200 million) and 8.51% (Rs 1,277 million) of the original offers received were sold to the market due to higher yields because of combination of inflationary pressure and persistent uncertainty.

Consequently, only 42.01% (Rs 18,904 million) of the total Rs 45,000 million parcel was sold, led by the 91-day maturity where 174.27 per cent (Rs 17,427 million) of the original parcel (Rs 10,000 million) was sold to the market at a weighted average yield (WAY) of  5.08%, up three basis points (bps) week on week  (WoW) to yesterday. 

Failure in treasury auctions lead to a splurge of demand-pull inflationary money printing to meet Government of Sri Lanka (GoSL’s) monetary commitments due to a lack of revenue.

Meanwhile, the WAY fetched by the 364-day tenure was 5.15%, superimposing with the maximum administered yield (MAY) fixed for this tenure at yesterday’s auction. The WAY fetched for the 182-day tenure at yesterday’s auction was 5.12%, up two bps WoW. The 91 and 182-day tenures are not governed by MAYs.

By Paneetha Ameresekere | Published: 2:00 AM Apr 8 2021

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