T-bill yields take a toll with sharp declines

By First Capital Research

Yesterday’s treasury bill (T-bill) auction saw a sharp decline in rates across the board. 

The Central Bank raised a total of Rs.155.0 billion with the total offered amount being fully accepted across all three maturities. The three-month T-bill was fully subscribed at Rs.35.0 billion, the six-month T-bill was fully subscribed at the offered amount of Rs.50.0 billion and the one-year T-bill was fully accepted at Rs.70.0 billion. The weighted average yield rates saw declines, where the three-month T-bill saw a decline of 21bps at 8.12 percent, the six-month T-bill saw a decline of 19bps at 8.25 percent and the one-year T-bill saw a decline of 17bps at 8.63 percent. The secondary market yield curve experienced mixed activity, with notable interest amongst the 2026, 2027 and 2028 maturities. On the short end of the curve, 15.05.26, 01.08.26 and 15.12.26 traded at rates of 8.80 percent, 8.80 percent and 9.15 percent, respectively. 01.05.27, 15.09.27 and 15.10.27, traded at rates of 9.70 percent, 9.80 percent and 9.80 percent, respectively. On the belly end of the curve, 15.01.28, 15.02.28, 15.03.28, 01.05.28 and 01.07.28 traded at 10.10 percent, 10.15, 10.15 percent, 10.27 percent and 10.35 percent, respectively. Similarly, 15.09.29 and 15.10.30 traded at rates of 10.80 percent and 11.35 percent, respectively. On the external front, the Sri Lankan rupee depreciated against the US dollar, closing at Rs.297.5/US dollar, compared to Rs.296.9/US dollar recorded the previous day. The Central Bank holdings of government securities remained unchanged, closing at Rs.2,511.92 billion yesterday. Overnight liquidity in the banking system expanded to Rs.148.47 billion, from Rs.122.45 billion recorded the previous day.