Demand for LKR 60 billion of bills was strong, and yields on the three main tenors edged up by 1 to 5 basis points.
Investors bid LKR 144.6 billion for the LKR 60 billion of Treasury bills offered in the first phase of the latest auction. That is about 2.4 times the amount on offer. The full LKR 60 billion was accepted, so roughly 41% of the bids were taken up.
Yields on the three main tenors were:
- 91-day bills: 9.20%, up 2 basis points
- 184-day bills: 9.37%, up 1 basis point
- 364-day bills: 9.93%, up 5 basis points
A basis point is one hundredth of a percentage point. The report does not state the baseline for these changes.
A second phase, held the following day, drew bids of LKR 12.0 billion, of which LKR 6.0 billion was accepted. Yields were 9.37% for 184-day bills and 9.93% for 364-day bills, unchanged from the first phase. No yield was recorded for the 91-day tenor in this phase. Across both phases, LKR 66.0 billion of bills was accepted.
The first phase was held on September 23 and the second on September 24, with both settling on September 25. Treasury bills worth about LKR 91.8 billion mature in the week ending October 2, more than the amount accepted at this auction. The data does not show whether other auctions or Central Bank operations fall in that week.
The Wider Context
Demand at the auction came as liquidity in the banking system rose to LKR 370.92 billion from LKR 354.06 billion. Bids well above the amount offered are consistent with lenders and investors having ample short-term funds, though the auction data does not say who bid or why.
Secondary market yields for 91-day, 182-day and 364-day bills were about 9.25%, 9.45% and 9.95%, up 3 to 5 basis points on a week earlier. These are close to the auction yields.
Key Numbers
| Indicator | Figure |
|---|---|
| Phase One amount offered | LKR 60.0 Bn |
| Phase One bids received | LKR 144.6 Bn |
| Phase One amount accepted | LKR 60.0 Bn |
| Bids to amount offered | About 2.4 times |
| Phase Two bids / accepted | LKR 12.0 Bn / LKR 6.0 Bn |
| 91-day yield (Phase One) | 9.20% (+2 bps) |
| 184-day yield (both phases) | 9.37% (+1 bp) |
| 364-day yield (both phases) | 9.93% (+5 bps) |
| Bills maturing, week ending October 2 | About LKR 91.8 Bn |
| Banking system liquidity | LKR 370.92 Bn |
Business Impact
Treasury bill yields are a reference point for short-term borrowing costs across the economy, including in pricing for working capital and other short-term facilities. The changes at this auction were small, and a single auction does not set a direction. Businesses with short-term loans linked to bill rates should watch whether the small increases continue at the next auctions. For treasury desks and lenders, the level of bids relative to the amount offered is a guide to funding conditions at the short end of the market.
Source Attribution: Central Bank of Sri Lanka statistics and publicly available market information.