Sri Lanka T-bills saw weaker-than-expected demand at the September 17 auction, with Rs54 billion sold from an offered Rs75 billion and yields largely unchanged across maturities. The result underscores muted investor appetite for short-term government paper ahead of the Sep 19 settlement.
Sri Lanka T-bills auction offered Rs75bn but sold Rs54bn across maturities; settlement on Sep 19.
Sri Lanka T-bills attracted substantial bidding but the state debt office accepted less than the amount on offer at the auction held on September 17. Of the Rs75 billion offered, the debt office sold Rs54 billion, while receiving total bids amounting to Rs124.57 billion. The 91-day, 182-day and 364-day papers were made available on tap at the weighted average yield announced by the debt office, with the settlement scheduled for September 19.
Breaking down the auction by maturity, the three-month bill saw the 3-month yield dip one basis point to 7.57 percent, with Rs12.5 billion offered and Rs11.3 billion sold. The six-month paper was unchanged at a 7.89 percent yield, after Rs47.5 billion was offered and Rs34.04 billion sold. The 12-month bill stayed at an 8.02 percent yield, with Rs15 billion offered and Rs8.62 billion taken up by investors. These metrics indicate that while demand exists, investors were selective, concentrating bids higher than the accepted volume but not prompting higher yields at the margin.
Market participants interpret the outcome as a signal that short-term liquidity and investor risk appetite remain cautious. The fact that total bids exceeded supply substantially shows there is interest in government paper, yet the decision by the debt office to accept only part of the offer suggests it prioritized managing short-term debt rollover and yield stability over fully exhausting the offered amount. For government financing, the partial sale reduces immediate cash inflows versus a fully subscribed auction, while the flat yields help contain borrowing costs in the short term.
Looking ahead, observers will watch upcoming auctions and central bank notices for signs of changing liquidity conditions and any moves in the yield curve. For investors, the auction reinforces the importance of monitoring primary market allotments rather than relying solely on headline offer sizes. The settlement date is September 19, when the successful bidders will be settled into the bills issued by the state debt office.