Sri Lanka fails to sell 53-pct of Treasuries at auction, ceiling rate nudged up

ECONOMYNEXT – Sri Lanka has failed to sell 48 percent of Treasuries offered at an ‘auction’ despite a pre-announced ceiling rate being raised 2 basis points, data from the state debt office showed.

The debt office sold 510 million rupees of 3-month bills after offering 10 billion rupees at the pre-announced ceiling rate of 4.69 percent, up 2 basis points from a week earlier.

9.7 billion rupees of 6-month bills were sold after offering 11.0 billion at the ceiling rate of 4.80 percent, which is the pre-determined ceiling rate.

8.4 billion rupees of 12-month bills were sold after offering 19 billion rupees at the pre-determined rate of 5.05 percent, up 02 basis points from a week earlier.

Sri Lanka is conducting Treasury bill ‘auctions’ with rates pre-announced ceiling rates, and large volumes of bills are unsold.

In the December 30 bill sale, 40 billion rupees of securities were offered and 18.7 billion rupees of bids were accepted, the debt office said.

In the past tens of billions of rupees of unsold bills were taken up by the central bank with printed money expanding reserve money.

It is not clear how much of the offered bills are already with the central bank.

So far during 2020, the central bank’s Treasury bill portfolio had grown by 568 billion rupees (about 3.0 billion dollars) with 230 billion rupees (about 1.2 billion dollars) of excess liquidity remaining. There were also some reserve ratio cuts and a profit transfer.

Reserves had dropped about 2.4 billion US dollars during the year excluding a 400 million dollar swap from India. (Colombo/Dec30/2020 – )

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