T-Bill rates drop for 16th straight week at auction

• Secondary bond market broadly steady; rupee depreciates

By Wealth Trust Securities

At the weekly Treasury bill auction conducted on Tuesday the weighted average yields across all three offered maturities declined for the 12th consecutive week. This marks a continued downward trend, with yields on at least one tenor decreasing over the past 16 weeks. Accordingly, the weighted average rates on the 91-day tenor dropped by 04 basis points to 7.57%, the 182-day tenor by 03 basis points to 7.87% and the 364-day tenor by 01 basis point to 8.31%.

Total bids received exceeded the offered amount by 2.04 times, and the entire Rs. 140 billion on offer was successfully raised in the 1st phase in competitive bidding.

The 2nd phase of subscription for the auction will be opened on all three tenors at the weighted average rates until close of business of the day prior to settlement (i.e., 3.00 p.m. on 27.02.2024). 

The secondary bond market on Tuesday saw yields hold broadly steady apart from some concentrated interest on 2029 tenors which traded lower. Overall market activity and transaction volumes were seen at moderate levels, again apart from the 2029 tenors which saw considerable action.

The 15.12.26 maturity was seen trading at the rate of 8.79%. The 15.09.27 maturity was seen trading at the rate of 9.40%. The 15.03.28, 01.07.28 and 01.09.28 maturity was seen trading at the rates of 10.05%, 10.235% to 10.28% and 10.30% respectively. The 15.06.29, 15.07.29 and 15.12.29 maturities traded at the rates of 10.70%, 10.76% to 10.79% and 10.80% respectively. The most sought after 15.09.29 maturity was seen hitting an intraday low of 10.74% on the back of considerable buying interest. However, it was seen moving back up to trade at the rate of 10.77% following the auction outcome.

In secondary market Treasury bill transactions were observed on May 2025 (prior to the auction), August 2025 and January/February 2026 were seen trading at the rates of 7.70%, 7.85% and 8.33%-8.32% respectively.

This comes ahead of the upcoming Treasury bond auction, with a total offered amount of Rs. 27.50 billion scheduled for the 27 February (Today). The auction will be comprised of:

• Rs. 15 billion: Maturing on 15 June, 2029, with a coupon rate of 11.75%.
• Rs. 12.50 billion: Maturing on 15 December, 2032, with a coupon rate of 11.50%.

For context, at the previous Treasury Bond auctions conducted on 13 February the entire Rs. 67.50 billion offered was raised across both phases, with total bids exceeding the offer by 2.75 times.

The 01.09.28 maturity (11.50% coupon) was fully subscribed in the 1st phase with Rs. 37.50 billion secured at a weighted average yield of 10.31%.

The 15.10.30 maturity (11.00% coupon) raised Rs. 29.42 billion (98.08%) in the 1st phase at the weighted average rate of 11.23%. The balance was raised at the second phase, leading to the subscription of the entire Rs. 30 billion.

The total secondary market Treasury bond/bill transacted volume for 24 February 2025 was Rs. 14.35 billion.

In money markets, the weighted average rates on overnight call money and Repo stood at 7.98% and 7.98% respectively.

The net liquidity surplus stood at Rs. 151.07 billion on Tuesday. Rs. 1.38 billion was withdrawn from the Central Banks SLFR (Standing Lending Facility Rate) of 8.50%, while an amount of Rs. 152.45 billion was deposited at the Central Banks SDFR (Standard Deposit Facility Rate) of 7.50%. 

Forex market 

In the Forex market, the USD/LKR rate on spot contracts closed the day broadly steady at Rs. 295.65/295.80 as against its previous day’s closing level of Rs. 296.65/296.90. 

The total USD/LKR traded volume for 24 February 2025 was $ 23.00 million. 

(References: Central Bank of Sri Lanka, Bloomberg E-Bond trading platform, Money broking companies)