T-bill auction undersubscribed for third straight week; rates remain static

• Secondary bond market yields see-saw; recover at close
• Rupee depreciates

By Wealth Trust Securities 

The weekly Treasury bill auction went undersubscribed at the first phase for the third consecutive week, with only 4.69% or Rs. 3.75 billion of the total Rs. 80 billion amount offered. This was despite total bids received exceeding the offered amount by 1.74 times.

The weighted average yield rates remained unchanged across the board, after increasing for the first time in 20 weeks the preceding week. Accordingly, the weighted average rate on the 91-day tenor was recorded at 7.59%, the 182-day tenor at 7.91% and the 364-day tenor at 8.31%.

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

Meanwhile, the secondary bond market initially saw yields continue to rise with a notable increase observed on tenors within the range of 2028-2029. However, a recovery was observed following the outcome at the Treasury bill auction which led to secondary market two-way quotes closing broadly steady.

The 15.09.27 saw rates drop from an intraday high of 10.10% to trade at a low of 10.00%. The 01.05.28 maturity saw rates hit an intraday high of 10.50% before recovering back to trade at the rate of 10.35% at the close of the day. The rest of the yield curve followed suit. The 01.07.28 maturity saw rates decline from an intraday high of 10.52% to a low of 10.45% and the 15.10.28 dropped from a high of 10.65% to a low of 10.50%. The 15.09.29 and 15.12.29 maturities were seen recovering from intraday highs of 11.00 to trade at a low of 10.90% post auction.

This comes ahead of the round of Treasury bond auctions scheduled to be held on 10 April (today).

The auctions will be comprised of:

• Rs. 75 billion from a 15 December 2029 maturity bearing a coupon rate of 11.00%
• Rs. 25 billion from a 15 December 2034 maturity bearing a coupon rate of 10.25%

The settlement for which will be on 16 April 2025.

For context at the previous round of auctions: held on 12 March, the full Rs. 210 billion on offer—the largest auction for 2025 so far—was successfully raised at the first phase through competitive bidding, with total bids exceeding the offer by 2.29 times.

The 15.12.29 maturity (11.75% coupon) was issued at a weighted average yield of 10.72%. Maturity-wise the entire Rs. 85 billion offered was fully subscribed.

The 15.12.32 maturity (11.00% coupon) was issued at 11.40% also raising the full Rs. 75 billion offered.

The 15.09.34 maturity (10.25% coupon) was issued at 11.50% with the entire Rs. 50 billion successfully raised.

The total secondary market Treasury bond/bill transacted volume for 08 April 2025 was Rs. 12.8 billion.

In money markets, the weighted average rates on overnight call money and Repo stood at 7.95% and 7.96% respectively.

The net liquidity surplus stood at Rs. 177.65 billion yesterday. Rs. 0.01 billion was withdrawn from the Central Banks SLFR (Standing Lending Facility Rate) of 8.50%, while an amount of Rs. 177.65 billion was deposited at 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 depreciating to Rs. 301/302 as against its previous day’s closing level of Rs. 299.75/300.25. 

The total USD/LKR traded volume for 08 April 2025 was $ 71.83 million. 

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