T-bill rates stabilise at auction

• Secondary bond market yields hold steady ahead of Rs. 210 b T-bond auction
• Rupee stable

By Wealth Trust Securities

At the weekly Treasury bill auction held yesterday, yields stabilised, ending a thirteen-week streak of consecutive declines across all three offered maturities. The weighted average rate only on the 91-day tenor edged down marginally by 1 basis point to 7.52%, while the 182-day and 364-day tenors remained unchanged at 7.86% and 8.34%, respectively.

Total bids received exceeded the offered amount by 1.99 times, and the entire Rs. 165.50 billion on offer was successfully raised in the 1st phase in competitive bidding.

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. on 12.03.2025). Given below are the details of the auction.

Meanwhile, the secondary bond market yesterday continued to consolidate, with yields trading within a narrow band on the back of healthy market activity and transaction volumes. 

Accordingly, the 15.05.26 maturity was seen trading at the rate of 8.50%. The 15.09.27 and 15.12.27 maturities were seen changing hands within the range of 9.45% to 9.46% and 9.63%-9.65% respectively. The 15.02.28 maturity was seen trading at the rate of 10.00% and the 15.03.28 maturity at the rate of 10.05%. The 01.05.28 and 01.07.28 maturities were seen trading at the rates of 10.10% and 10.20% respectively. The 15.09.29 maturity traded at the rate of 10.74% while the 15.10.30 maturity was seen changing hands at the rate of 10.99%. The 15.03.31 maturity traded within the range of 11.35%-11.32%.

This precedes the upcoming Rs. 210 billion Treasury bond auction scheduled to be held today the 12 March 2025. The auction will be comprised of: 

• Rs. 85 billion from a 15 December 2029 maturity bearing a coupon rate of 11.00%
• Rs. 75 billion from a 15 December 2032 maturity bearing a coupon rate of 11.50%
• Rs. 50 billion from a 15 September 2034 maturity bearing a coupon rate of 10.25%

The settlement for which will be held on 17 March 2025.

For context at the previous round of Treasury auctions recorded a bullish outcome. The auctions successfully raised the entire Rs. 27.50 billion offered at the 1st phase in competitive bidding. The total bids received exceeded the offered amount by a staggering 4.56 times. 

In particular, the 15.06.29 maturity (11.75% coupon) was issued at a weighted average yield of 10.63%. This was well below its pre-auction rate of 10.68%/10.72% and trades at 10.70%. Maturity-wise the entire Rs. 15.00 billion offered was snapped up at the 1st phase of subscription in competitive bidding.

The 15.12.32 maturity (11.50% coupon) was issued at the weighted average rate of 11.41%. This was also slightly below market, as a similar, slightly shorter tenor, 01.10.32 maturity was seen quoted at the two-way rate of 10.40%/10.48% just prior to the auction.  The maturity also raised the entire 

Rs. 12.50 billion on offer at the 1st phase.

The total secondary market Treasury bond/bill transacted volume for 10 March 2025 was Rs. 21.91 billion.

In money markets, the weighted average rates on overnight call money and Repo stood at 7.97% and 7.99% respectively. The net liquidity surplus stood at Rs. 181.38 billion on Tuesday.

Forex market 

In the Forex market, the USD/LKR rate on spot contracts closed the day broadly steady at Rs. 295.50/295.55 as against its previous day’s closing level of Rs. 295.45/295.55. 

The total USD/LKR traded volume for 10 March 2025 was 

$ 83.29 million. 

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