Three-month rates drop 33 basis points as the Public Debt Management Office secures full subscription across all tenors
The Public Debt Management Office (PDMO) raised the full LKR 140.0 billion on offer at its weekly Treasury bill auction, with weighted average yields falling across all three tenors as demand strengthened.
The 3-month bill yield declined by 33 basis points to 9.44%, the steepest drop of the three tenors on offer. The 6-month yield eased 21 basis points to 9.78%, while the 12-month yield fell 18 basis points to 10.01%.
Each tenor was allotted in line with the amounts initially offered: LKR 55.0 billion for the 3-month bill, LKR 50.0 billion for the 6-month bill, and LKR 35.0 billion for the 12-month bill.
The auction result coincided with firmer secondary market activity for government securities. Yields on outstanding bonds also edged lower across the curve, with the most actively traded maturities showing declines of between 13 and 21 basis points compared to the prior week, according to secondary market data.
The move in short-term rates comes as liquidity conditions in the banking system have improved. Excess liquidity in the banking system stood higher than in the prior session, providing additional context for the demand seen at the short end of the curve.
Total outstanding government securities stock stood at LKR 18,639.47 million as of the latest reporting date, up 0.11% week-on-week, comprising LKR 16,279 million in Treasury bonds and LKR 2,361 million in Treasury bills.
Key Numbers
| Metric | Value | Change |
|---|---|---|
| 3M T-Bill weighted avg. yield | 9.44% | -33 bps |
| 6M T-Bill weighted avg. yield | 9.78% | -21 bps |
| 12M T-Bill weighted avg. yield | 10.01% | -18 bps |
| Total offered/raised | LKR 140.0 Bn | Fully subscribed |
| 3M bills raised | LKR 55.0 Bn | — |
| 6M bills raised | LKR 50.0 Bn | — |
| 12M bills raised | LKR 35.0 Bn | — |
| Outstanding GSec stock | LKR 18,639.47 Mn | +0.11% WoW |
Business Impact
Falling short-term Treasury yields typically signal easing pressure on the cost of government borrowing and can filter through to lending rates over time, a relevant consideration for businesses planning working capital financing or reviewing fixed-deposit and money market returns. Corporate treasurers holding short-term instruments or comparing yields on money market funds may see this as an early signal of a softer near-term rate environment, though a single auction is not on its own indicative of a sustained trend.
Source Attribution
Source: Public Debt Management Office auction results, Central Bank of Sri Lanka statistics and publicly available market information.