PDMO raises full LKR 140 billion offer as short-tenor bills draw strong demand, while the 12-month bill falls short of target
The Public Debt Management Office (PDMO) fully subscribed its weekly Treasury bill auction on Tuesday, raising the entire offered amount of LKR 140 billion, with the shorter-tenor bills drawing demand well in excess of their targets.
The 3-month bill raised LKR 61.5 billion against a smaller initial offer, while the 6-month bill raised LKR 60.1 billion, both exceeding their respective offer amounts. The 12-month bill, by contrast, raised LKR 18.4 billion, falling short of its LKR 30 billion offer, indicating comparatively softer investor appetite for longer-dated paper this week.
Yields on the shorter bills eased at the auction. The weighted average yield on the 3-month bill fell 18 basis points to 9.95 percent, while the 6-month bill’s yield declined 3 basis points to 10.24 percent. The 12-month bill’s yield was unchanged at 10.20 percent.
In the secondary market, trading activity remained subdued, with the yield curve broadly steady day-on-day and interest concentrated at the short end. The 15 October 2028 maturity traded at 10.74 percent. In the 2029 segment, the 15 June 2029 bond traded at 11.10 percent, while the 15 September and 15 October 2029 maturities both traded higher, at 11.25 percent.
Looking at the broader trend over the past week, yields across most tenors from the 3-year point outward have moved higher, with increases ranging from roughly 10 to 30 basis points compared to a week earlier — a firmer trend than today’s largely flat session on secondary bonds would suggest in isolation. Bills under one year, by contrast, held steady or eased slightly over the same period.
Total outstanding government securities stood at LKR 18,634.42 billion, up 0.64 percent week-on-week, with Treasury bonds accounting for the large majority of outstanding stock at LKR 16,248 billion against LKR 2,386 billion in Treasury bills.
Foreign holdings of local government securities rose to LKR 176,561 million, up 4.54 percent week-on-week, continuing a steady increase seen over recent weeks even as year-to-date foreign flows in the equity market have remained negative.
Key Numbers
| Metric | Value |
|---|---|
| T-Bill Auction Offer | LKR 140.0 Bn |
| Total Raised | LKR 140.0 Bn (fully subscribed) |
| 3M Bill Raised / Yield | LKR 61.5 Bn / 9.95% (-18 bps) |
| 6M Bill Raised / Yield | LKR 60.1 Bn / 10.24% (-3 bps) |
| 12M Bill Raised / Yield | LKR 18.4 Bn / 10.20% (unchanged) |
| Total Outstanding GSec | LKR 18,634.42 Bn (+0.64% WoW) |
| Foreign Holdings of GSec | LKR 176,561 Mn (+4.54% WoW) |
| 2028 Secondary Yield | 10.74% |
| 2029 Secondary Yields | 11.10% – 11.25% |
Business Impact
The full subscription of the auction, particularly the oversubscribed short-tenor bills, points to healthy demand for government paper and continued ease in short-term government funding costs, a favourable signal for the fiscal financing environment. For businesses with short-term treasury exposure or cash management strategies linked to T-bill rates, the modest decline in 3-month and 6-month yields suggests marginally lower returns on short-duration instruments going forward. The softer demand for the 12-month bill, alongside a firmer trend in medium- and longer-tenor secondary yields over the past week, suggests investors may be seeking a premium for extending duration amid ongoing uncertainty — a dynamic corporates and financial institutions planning longer-term borrowing or investment should monitor. Rising foreign holdings of government securities, even as equity flows remain negative, may point to continued but selective foreign interest in Sri Lankan fixed income.
Source: Central Bank of Sri Lanka statistics, Department of Census and Statistics, and publicly available market information.