T-Bill Rates Continue Downward Trajectory

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Daily report for the 11th February 2025 – Courtesy Wealth Trust Securities Ltd

  • T-Bill Rates Continue Downward Trajectory
  • Secondary Bond Market Yields Dip Down Ahead of Rs 67.50 T-Bond Auction
  • Rupee Steady

The weighted average rates declined across all three offered maturities for the 10th consecutive week at the weekly Treasury Bill auction conducted on Tuesday. This marks a continued downward trend, with yields on at least one tenor decreasing over the past 14 weeks. Accordingly, the weighted average rates on the 91-day tenor dropped by 10 basis points to 7.69%, the 182-day tenor by 06 basis points to 7.94% and the 364-day tenor by 01 basis point to 8.42%.

Total bids received exceeded the offered amount by 2.27 times, and the entire Rs 157.50 billion on offer was successfully raised in the 1st phase in competitive bidding. However, the majority of the funds or 81% were raised from the shorter tenors, with the 3 months and 6 months tenors raising 28.03% and 52.92% of the total offered amount respectively. The 1-year tenor raised only 19.05% despite having the largest allocation of the total offered amount.

The 2nd phase of subscription for the auction will be opened only on the 364-day ISIN at the weighted average rate until close of business of the day prior to settlement (i.e., 3.00 pm on 13.02.2024). Given below are the details of the auction;

Meanwhile, the secondary bond market yields were seen edging downwards slightly on the back of renewed buying interest. Activity and transaction volumes were seen at healthy levels.

The 01.05.27 maturity was seen trading at the rates of 9.53%-9.50%. The 15.02.28 and 15.03.28 maturities were seen trading within the range of 10.13%-10.10% collectively. The 01.05.28 and 01.07.28 maturities were seen trading within the ranges of 10.27%-10.25% and 10.38%-10.33% respectively. The 15.10.28 and 15.12.28 bonds were seen trading at the rates of 10.38% and 10.46%-10.45% respectively. The 15.09.29 maturity was seen trading at the rates of 10.90%-10.87%. The 15.10.30 bond was seen trading within the range of 11.29%-11.26%. The 01.07.32 maturity was seen trading at the rate of 11.4850%-11.48%.

This comes ahead of the upcoming Treasury Bond auction, with a total offered amount of Rs. 67.50 billion scheduled for 13th February (Today). The auction will be comprised of:

  1. Rs. 37.50 billion: Maturing on September 01, 2028, with a coupon rate of 11.50%.
  2. Rs. 30.00 billion: Maturing on October 15, 2030, with a coupon rate of 11.00%.

For context, at the previous Rs 40.00 billion Treasury Bond auction, the following maturities were issued:

  1. 12.29 maturity (11.00% coupon):
  • Weighted average yield: 10.73%
  • Subscription: Fully subscribed (Rs 25.00 billion) in the 1st phase through competitive bidding
  1. 06.33 maturity (9.00% coupon):
  • Weighted average yield: 11.47%
  • Subscription: Fully subscribed (Rs 15.00 billion) in the 1st phase through competitive bidding

The total secondary market Treasury bond/bill transacted volume for 10th February 2025 was Rs. 14.60 billion.

In money markets, the weighted average rates on overnight call money and Repo stood at 8.00% and 8.01% respectively.

The net liquidity surplus stood at Rs. 163.50 billion on Tuesday. Rs. 1.59 billion was withdrawn from the Central Banks SLFR (Standing Lending Facility Rate) of 8.50%, while an amount of Rs. 165.09 billion was deposited at the 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 mostly unchanged at Rs. 296.80/297.00 as against its previous day’s closing level of Rs. 296.70/297.00.

The total USD/LKR traded volume for 10th February 2025 was US $ 54.10 million.

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