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Thursday December 2nd, 2021
Bonds & Forex

Sri Lanka Treasuries auction succeeds, yields up, inverted

ECONOMYNEXT – Sri Lanka has sold 74.5 billion rupees of Treasury bills at an auction Monday the first successful Treasuries auction held in months, through the short term yield curve has inverted with small volumes being sold.

The action was held on Monday with Wednesday a holiday.

The debt office sold 74.25 billion rupees of 3-month bills at 8.39 percent, up 35 basis points, after offering 20 billion rupees.

There were 158.5 billion rupees of bids for the 3-month bills indicating strong interest from genuine investors. For six and 12-month bills there was only perfunctory bids a little above the offered volumes.

The debt office sold only 200 million rupees of 6-month bills at 8.16 percent, up 96 basis points from 7.20 percent two weeks ago, after offering 22 billion rupees of bills.

Only 50 million rupees were sold in one year bills at 8.17 percent up 89 basis points from two weeks ago.

With the 3-month yield at 8.39 percent and the 12-month at 8.17 percent the short term yield curve is now inverted, though volumes are tiny.

Market expectations for the 12-month yield is above 9.0 percent.

In 2020 Treasury successful Treasury bill auctions were held on March 02, and July 14.

When bill auctions failed the central bank bought the bills with printed money, triggering forex shortages, currency falls and record balance of payments deficits and raised the possibility of sovereign default. (Colombo/Oct18/2021)

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