T-bill yields plummet across maturities post DDO

As expected, the yields at the Treasury bill auction yesterday plummeted, following the successful passage of the Domestic Debt Optimisation (DDO) plan through Parliament, last weekend.

The three-month bill yield fell to 17.79 percent, from 23 percent in the last auction, while six-month yields fell to 15.93 percent, from 19.49 percent. The 12-month bill yield fell to 13.86 percent, from 16.99 percent.

The Public Debt Department (PDD) of the Central Bank, on behalf of the Treasury, raised Rs.140 billion at yesterday’s auction, offering bills worth of the same amount.The PDD offered Rs.60 billion in three-month bills, Rs.40 billion each in six-month bills and 12-month bills and accepted the offers to the same proportion while the bids received at the auction topped Rs.252.5 billion.

The sharp decline in the yields is a reflection of the risk premium due to the DDO coming off. According to Finance State Minister Shehan Semasinghe, the sharp fall in yields will reduce the government’s borrowing costs and support economic growth The sharp decline in the yields is a reflection of the risk premium due to the

DDO coming off. According to Finance State Minister Shehan Semasinghe, the sharp fall in yields will reduce the government’s borrowing costs and support economic growth