Sri Lanka received Rs. 180.735 billion in bids at its October 14 Treasury bill auction but ultimately accepted Rs. 73.332 billion, according to figures released by the Public Debt Management Office.
The government initially offered Rs. 90 billion in Treasury bills across three maturities. Investors submitted bids worth slightly more than twice that amount.
Despite the level of bidding, the amount accepted during the primary auction was Rs. 66.126 billion.
A further Rs. 7.206 billion was raised through the second subscription phase, bringing the final accepted amount to Rs. 73.332 billion.
The combined result was Rs. 16.668 billion below the original amount offered.
The auction figures
| Measure | October 14 |
|---|---|
| Amount offered | Rs. 90.000 billion |
| Total bids received | Rs. 180.735 billion |
| Accepted at primary auction | Rs. 66.126 billion |
| Accepted in second phase | Rs. 7.206 billion |
| Total accepted | Rs. 73.332 billion |
Calculations using the official auction results show that bids represented approximately 2.01 times the amount offered.
The final accepted amount represented 81.5% of the original offering.
Strong bidding does not automatically require the issuer to accept every offer. Auction allocations also depend on the yields submitted by investors and the terms on which the government is prepared to borrow.
The published results establish the difference between bids and accepted borrowing. They do not provide the complete distribution of rejected bid yields.
The six-month maturity received a smaller allocation
The distribution of accepted bids differed substantially between the three Treasury bill maturities.
| Maturity | Offered | Accepted | Yield |
|---|---|---|---|
| 91 days | Rs. 40bn | Rs. 40.192bn | 9.30% |
| 182 days | Rs. 30bn | Rs. 8.453bn | 9.44% |
| 364 days | Rs. 20bn | Rs. 17.481bn | 9.95% |
These figures relate to the primary auction before the second subscription phase.
The 182-day maturity received bids worth Rs. 62.120 billion, more than twice the Rs. 30 billion offered. Yet only Rs. 8.453 billion was accepted.
That represented approximately 28.2% of the amount offered for the maturity.
By comparison, the 91-day maturity received an accepted allocation slightly above its advertised amount, while the 364-day maturity received approximately 87.4% of its offering.
The six-month result therefore accounts for a substantial part of the difference between the government’s initial offering and the amount accepted at the primary auction.
Borrowing fell compared with the previous week
The October 7 Treasury bill auction raised Rs. 88 billion after its second subscription phase.
The October 14 auction raised Rs. 73.332 billion, a reduction of Rs. 14.668 billion, or approximately 16.7%.
Both auctions attracted bids exceeding the total amount offered.
Weighted average yields changed little. The 91-day yield increased from 9.26% to 9.30%, a rise of four basis points. The 182-day yield remained at 9.44%, and the 364-day yield stayed at 9.95%.
7 October: Rs. 88.000 billion accepted.
14 October: Rs. 73.332 billion accepted.
Difference: Rs. 14.668 billion lower, equivalent to 16.7%.
The figures show a reduction in accepted Treasury bill issuance between the two weeks. They do not, on their own, establish a reduction in the government’s overall financing requirement, which also depends on debt maturities, other borrowing and available cash balances.
Sri Lanka’s borrowing decisions are taking place alongside efforts to maintain fiscal discipline and manage public debt following the economic crisis.
Earlier Lakbima News reporting on government revenue and expenditure examined how higher tax collections have affected the country’s fiscal position.
The October 14 auction results provide a separate measure of current financing conditions. The government received substantial bids but accepted less than it had initially offered, with yields largely unchanged from the previous week.
