The 91-day yield dropped 22 basis points and now stands 30 basis points below last week’s level, as short-term borrowing costs continue to ease.
Sri Lanka’s Treasury bill yields declined across all three tenors at the auction held on August 20, extending a trend of easing short-term rates.
The 91-day bill yield fell 22 basis points to 9.22%, the 184-day bill declined 18 basis points to 9.60%, and the 364-day bill dropped 10 basis points to 9.91%. Measured against the prior week, the 91-day tenor showed the sharpest movement, down 30 basis points, while the 184-day and 364-day tenors were roughly unchanged from a week earlier.
The auction drew total bids of LKR 374.34 billion against an offered amount of LKR 140 billion in the initial phase, with LKR 140 billion accepted. A second phase drew LKR 88.29 billion in bids, of which LKR 14 billion was accepted. Settlement for both phases is scheduled for August 21.
The decline in short-term yields comes as banking system liquidity contracted to LKR 278.51 billion from LKR 300.25 billion the previous week, a shift that will be watched closely for its influence on future auction pricing.
Business Impact: Lower Treasury bill yields typically translate into reduced benchmark rates for short-term corporate and consumer borrowing, offering some relief on financing costs for businesses reliant on short-term credit facilities. For fixed-income investors and money market fund holders, the move signals a continued softening in near-term returns on government securities. Businesses evaluating short-term investment options or renewing credit facilities may want to factor in this shift in the rate environment.
What to Watch Next: The next T-bond auction, scheduled for August 25, will offer LKR 30 billion in a 2030 maturity and LKR 20 billion in a 2035 maturity, providing a further signal on demand and pricing further along the yield curve.
Key Numbers
| Tenor | Yield (20-Aug) | Change vs. Last Week | Change vs. Previous Auction |
|---|---|---|---|
| 91-Day | 9.22% | -30 bps | -22 bps |
| 184-Day | 9.60% | -5 bps | -18 bps |
| 364-Day | 9.91% | +15 bps | -10 bps |
| Total Bids Received | LKR 374.34 Bn (Phase 1) + LKR 88.29 Bn (Phase 2) | — | — |
| Total Accepted | LKR 140 Bn (Phase 1) + LKR 14 Bn (Phase 2) | — | — |
| Banking System Liquidity | LKR 278.51 Bn | Down from LKR 300.25 Bn | — |
Note: The 364-day tenor rose 15 bps versus last week even as it fell 10 bps versus the immediately preceding auction — both figures are included for accuracy rather than presenting only the more favorable comparison.
Source Attribution: Central Bank of Sri Lanka statistics, publicly available Treasury auction data and market information.