PDMO raises full LKR 120Bn target as 3-month and 6-month weighted average yields decline 16 basis points each, while secondary bond trading stays quiet
Treasury Bill yields declined across all tenors at the Public Debt Management Office’s weekly auction on August 24, with short-term rates leading the move lower.
The PDMO raised the full initial offer of LKR 120Bn, with 3-month bills contributing LKR 50Bn and 6-month and 12-month bills raising LKR 35Bn each — both in line with the amounts initially offered. Weighted average yields on the 3-month and 6-month bills fell 16 basis points to 9.06% and 9.44% respectively, while the 12-month yield eased a more modest 2 basis points to 9.89%.
The auction was brought forward due to the shortened trading week. In the secondary market, activity was described as quiet, with light buying interest and moderate volumes across maturities. Movement across popular benchmark bonds was mixed on a week-on-week basis: the 15.09.2029 maturity eased 13 basis points while the 15.12.2032 maturity rose 12 basis points, and the 01.07.2028 and 15.08.2036 maturities were largely unchanged. Shorter-dated bonds, including the 01.07.2028 maturity, traded around 10.15%, while the longer 15.08.2036 maturity changed hands within a narrow 11.97%-12.00% range.
The move in short-tenor T-Bill yields came alongside a rise in banking system liquidity and a slight strengthening of the rupee against the US dollar during the same session.
Key Numbers
| Metric | Value |
|---|---|
| 3M T-Bill Yield | 9.06% (-16bps) |
| 6M T-Bill Yield | 9.44% (-16bps) |
| 12M T-Bill Yield | 9.89% (-2bps) |
| Total Raised | LKR 120Bn (full offer) |
| 3M Bills Raised | LKR 50Bn |
| 6M Bills Raised | LKR 35Bn |
| 12M Bills Raised | LKR 35Bn |
| 15.09.2029 Bond (WoW) | -13bps |
| 15.12.2032 Bond (WoW) | +12bps |
Business Impact
The decline in short-term Treasury yields points to marginally lower near-term government borrowing costs and may filter through to short-tenor lending and deposit rates that businesses and SMEs rely on for working capital planning. The narrower move at the 12-month tenor, alongside mixed movement further out the curve, suggests the rate environment beyond the very short end remains comparatively stable for now.
Source Attribution
Source: Central Bank of Sri Lanka statistics, Public Debt Management Office data and publicly available market information.