PDMO’s largest scheduled issuance offers maturities out to 2037, as the market weighs the impact on borrowing costs
The Public Debt Management Office (PDMO) has announced a Treasury bond auction worth LKR 250 billion, scheduled for July 30, in one of the larger single-day issuances planned for the government’s domestic borrowing programme this year.
The auction will offer four maturities: LKR 90 billion in bonds maturing in 2031, LKR 80 billion maturing in 2034, LKR 50 billion maturing in 2036, and LKR 30 billion maturing in 2037. The instruments carry coupon rates of 11.60%, 11.70%, 10.85% and 10.75% respectively.
The announcement comes as secondary market activity in government securities has remained subdued in the run-up to the sale, with investors largely holding positions in anticipation of the new supply. Trading interest in the run-up to the auction was concentrated around bonds maturing in 2030, which changed hands at yields between 11.60% and 11.68%, while bonds maturing in 2033 traded at yields of 12.19% to 12.27%.
Secondary market yields on medium-to-long-dated government securities have risen over the past week even as short-term Treasury bill rates have eased, a pattern that suggests investors are pricing in the additional long-term supply ahead of Thursday’s sale. Foreign holdings of Treasury bonds have continued to build in recent weeks, reaching LKR 182.4 billion, up 3.3% week-on-week.
Banking system liquidity has also expanded ahead of the auction, with overnight funds in the system rising to LKR 173.80 billion from LKR 163.07 billion previously, a factor that could support demand at the sale.
Business Impact
The size and structure of this week’s auction will be closely watched as an indicator of the government’s borrowing costs across the yield curve, with direct implications for benchmark lending rates, corporate bond pricing and fixed-income returns for institutional investors. A large, well-absorbed auction would signal continued investor confidence in Sri Lankan government debt; weaker demand or higher accepted yields would point to rising costs for state borrowing over the medium term.
Key Numbers
| Metric | Value |
|---|---|
| Total Auction Size | LKR 250 billion |
| 2031 Maturity | LKR 90 billion, 11.60% coupon |
| 2034 Maturity | LKR 80 billion, 11.70% coupon |
| 2036 Maturity | LKR 50 billion, 10.85% coupon |
| 2037 Maturity | LKR 30 billion, 10.75% coupon |
| Auction Date | July 30, 2026 |
| Foreign Holding of T-Bonds | LKR 182.4 billion (+3.30% WoW) |
| Overnight System Liquidity | LKR 173.80 billion |
Source: Central Bank of Sri Lanka statistics and publicly available market information.