T-Bill sales synchronise after two years
By Paneetha ameresekere - January 5, 2023 2:00am0
Yesterday’s weekly Treasury (T) Bill auction for the first time after a near two year hiatus saw perfect synchrony, with Central Bank of Sri Lanka (CBSL) being able to sell all of the offered tenures, whilst ensuring that the weighted average yields (WAYs) fell for the fourth consecutive market week in a row.
Consequently, CBSL sold all the Rs 98,000 million
T-Bills offered at yesterday’s tenure, allowing for a 100 per cent subscription for each of the tenures offered. Subsequently, CBSL sold all of the 91,182 and 364 – day tenures offered at yesterday’s auction, with their splits being Rs 60,000 million, Rs 20,000 million and
Rs 18,000 million, respectively.
The WAYs fetched for the 91, 182 and 364 – day tenures at yesterday’s auction were 32.01 per cent, 32.02 per cent and 29.16 per cent, down 63 basis points (bps), 18 bps and 10 bps each, week on week (WoW), respectively.
Nonetheless, the fact that the WAY of the 364 maturity being smaller than both the 91 and 182 – day maturities for the nineteenth consecutive market week to yesterday and that of only the 91 – day maturity for the twentieth consecutive market week to yesterday is an indication that the market expects yield pressure to last only in the short term.
Meanwhile, the last time such perfect synchronization as described above took place was at the 20 January 2021 T-Bill auction, where Rs 40,000 million were offered and taken, with the splits 100 per cent subscribed being Rs 12,000 million, Rs 5,000 million and Rs 23,000 million, respectively, vis-à-vis the 91, 182 and 364 day maturities offered.
The WAYs fetched at the 20 January 2021 auction were 4.70 per cent, 4.77 per cent and 4.99 per cent for the 91, 182 and 364 – day maturities, unchanged WoW vis-à-vis the 91 – day maturity and down one and three bps each vis-à-vis the other two maturities, iethe 182 and 364 – day maturities, respectively.
In related developments, CBSL on behalf of the GoSL, will, by Monday, have to repay to the market at least Rs 93,228 million worth of maturing T-Bills. However, maturing T-Bills due to the CBSL by Monday are unknown as CBSL doesn’t disclose such figures.
Additionally, T-Bill maturities comprising a cumulative total of Rs 17,500 million of all three maturities, 91, 182 and 364 – day maturities, the splits of which are however unknown, but are also due to the market, of which 91 day maturities have already been repaid and of which the 182 – day maturity of unknown value is also due for repayment by Monday.
In like developments, the splits of the known maturities of Rs 93,228 million due for repayment to the market by Monday are Rs 76,421 million worth of 91- day maturities, Rs 15,809 million 182 – day maturities and Rs 998 million 364 – day maturities, respectively. CBSL is the steward of GoSL debt.
Usually, investments in T-Bill are risk free, because CBSL, which is mandated to print money and if GoSL is unable to repay such debt, generally, CBSL is mandated to print demand pull inflationary money and repay such creditors. Domestically, issuing of T-Bills is a key instrument used by GoSL to raise money locally.