ECONOMYNEXT – Sri Lanka sold 74.85 billion rupees of Treasury bills at Wednesday’s auction after offering 80 billion rupees, with yields marginally down, data from the state debt office showed.
The debt office offered 35 billion rupees of 3-month bills and sold 52.6 billion rupees, at 32.92 percent, down 14 basis points.
The cut-off was estimated at 33.45-percent by market participants around the same levels as last week.
14.7 billion rupees of 6-month bills were sold after offering 25 billion rupees at 32.45 percent, down 06 basis points.
7.42 billion rupees of 12-month bills were sold after offering 20 billion rupees, at 29.52 percent, down 01 basis point.
About 5.1 billion rupees of bills were unsold.
It is not clear how much bills are already owned by the central bank, which acquired around 3.0 trillion rupees of bills (including overnight) to suppress interest rates, trigger forex shortages, earn downgrades, lose reserves and eventually default on foreign debt.
Sri Lanka two weeks ago bought about 130 billion rupees in bills outright, reducing the room to acquire small volume of bills like at this weeks auction.
The interbank overnight short was only 158 billion rupees, about half the 330 billion rupees deposited overnight by cash-plus banks. If there the banks resume lending the rupee would be under about 500 million US dollars of pressure if there was no overnight short to absorb it, analysts say.
Sri Lanka’s bond yields have eased over the last few days, showing signs of the yield curve inverting. (Colombo/Nov23/2022)