The Public Debt Management Office fully met its target at Wednesday’s Treasury Bill auction, though weighted average yields edged higher across the 3-month, 6-month and 12-month tenors.
Sri Lanka’s Public Debt Management Office (PDMO) raised the full LKR 60 billion offered at its weekly Treasury Bill auction on Wednesday, with weighted average yield rates rising across all three tenors on offer.
For the 3-month bill, LKR 20 billion was initially offered and LKR 30.1 billion was accepted, with the weighted average yield rate (WAYR) rising 2 basis points to 9.20%. The 6-month bill saw LKR 19.5 billion accepted against an offered amount of LKR 25 billion, with its WAYR up 1 basis point to 9.37%. The 12-month bill drew LKR 10.4 billion in accepted bids, below the amount offered, while its WAYR increased 5 basis points to 9.93% — the largest single-tenor move in the auction.
The pattern of yields rising more sharply at the longer end of the auction, with the 12-month tenor moving furthest, points to somewhat firmer rate expectations further out on the short end of the curve, even as secondary market yields at longer maturities have moved in the opposite direction over the past week.
The auction result stands in contrast to broader secondary market government securities yields, which eased at the belly-to-long end of the curve on a weekly basis, underscoring a divergence between primary market pricing for short-term instruments and secondary market sentiment further along the curve.
Business Impact
T-Bill yields serve as a key reference point for short-term borrowing costs across the economy, including corporate short-term paper, bank deposit pricing and money market fund returns. A rise across all tenors, even a modest one, suggests short-term funding costs are not yet easing despite the sharp increase in banking system liquidity recorded the same day. Businesses and treasury teams benchmarking short-term financing costs should note the auction was fully subscribed at the offered amount, indicating continued investor demand for short-dated government paper despite the higher yields.
Key Numbers
| Tenor | Offered (LKR Bn) | Accepted (LKR Bn) | WAYR | Change |
|---|---|---|---|---|
| 3-Month | 20.0 | 30.1 | 9.20% | +2 bps |
| 6-Month | 25.0 | 19.5 | 9.37% | +1 bp |
| 12-Month | — | 10.4 | 9.93% | +5 bps |
| Total Raised | 60.0 | 60.0 | — | Fully subscribed |
Source: Central Bank of Sri Lanka statistics, Public Debt Management Office data and publicly available market information.