Sri Lanka allocated more than 87% of the Treasury bills accepted at its October 21 primary auction to securities maturing in just 91 days, a sharp increase in the proportion of short-term borrowing compared with the previous week’s auction.
The Public Debt Management Office accepted Rs. 80.611 billion in Treasury bills after receiving bids worth Rs. 186.002 billion.
Of the amount accepted, Rs. 70.391 billion was allocated to 91-day bills.
That represents approximately 87.3% of the primary-auction allocation.
The corresponding share at the October 14 auction was 60.8%, according to calculations by Lakbima News using the two official auction reports.
Shortest maturity receives most of the allocation
The government offered Rs. 100 billion in Treasury bills across three maturities on October 21.
The offering comprised Rs. 40 billion in 91-day bills, Rs. 35 billion in 182-day bills and Rs. 25 billion in 364-day bills.
Investors submitted bids worth Rs. 103.116 billion for the 91-day maturity alone.
The government accepted Rs. 70.391 billion of those bids, considerably more than the Rs. 40 billion originally offered for that maturity.
Allocations to the longer maturities were substantially smaller.
| Maturity | Offered | Bids received | Accepted |
|---|---|---|---|
| 91 days | Rs. 40.000bn | Rs. 103.116bn | Rs. 70.391bn |
| 182 days | Rs. 35.000bn | Rs. 51.265bn | Rs. 3.921bn |
| 364 days | Rs. 25.000bn | Rs. 31.621bn | Rs. 6.299bn |
| Total | Rs. 100.000bn | Rs. 186.002bn | Rs. 80.611bn |
All figures relate to the primary auction and are taken from the Public Debt Management Office’s October 21 announcement.
The government accepted approximately 176% of the amount originally offered in 91-day securities.
For the 182-day maturity, the accepted allocation represented approximately 11.2% of the amount offered.
The 364-day maturity received an allocation equivalent to approximately 25.2% of its offering.
Distribution changes sharply in one week
The October 14 primary auction had a different allocation pattern.
At that auction, the government accepted Rs. 40.192 billion in 91-day bills from a total primary allocation of Rs. 66.126 billion.
The shortest maturity therefore accounted for approximately 60.8% of the amount accepted.
On October 21, that share rose to approximately 87.3%.
14 October: 60.8% allocated to 91-day Treasury bills.
21 October: 87.3% allocated to 91-day Treasury bills.
Change: An increase of approximately 26.5 percentage points.
The figures exclude allocations made through the separate second subscription phase.
The value of 91-day bills accepted increased by Rs. 30.199 billion between the two primary auctions.
Meanwhile, the amounts accepted in the 182-day and 364-day maturities declined.
The resulting allocation was heavily concentrated in securities due to mature within approximately three months.
Interest rates show little movement
The weighted average yield on 91-day Treasury bills increased from 9.30% on October 14 to 9.32% on October 21.
That represents an increase of two basis points.
The 182-day yield remained unchanged at 9.44%.
The 364-day yield also remained unchanged at 9.95%.
The latest auction therefore produced a substantial change in the maturity distribution of accepted securities without a comparable movement in the published weighted average yields.
The auction report does not disclose the complete distribution of rejected bid yields.
It is therefore insufficient to establish the precise reasons why the government accepted relatively small amounts in the longer maturities.
Shorter maturities require earlier refinancing
Treasury bills are short-term government securities that must be repaid when they mature.
A 91-day bill reaches maturity sooner than a 182-day or 364-day bill.
Where maturing securities are refinanced through new borrowing, a greater concentration in shorter maturities can increase the frequency with which the government must return to the market.
The October 21 results show the distribution of securities accepted at one auction. They do not establish the maturity profile of Sri Lanka’s entire domestic debt portfolio.
Assessing the broader financing position requires information on outstanding government securities, upcoming maturities, available cash balances and other borrowing.
Earlier Lakbima News reporting examined the October 14 Treasury bill auction, when the government accepted less than the total amount offered despite receiving substantial investor bids.
The October 21 auction provides a new development: a marked increase in the proportion allocated to the shortest available maturity.
Second subscription phase remains open
The Public Debt Management Office has announced a second subscription phase for the 182-day and 364-day securities.
The deadline is 3 p.m. on October 22, ahead of settlement on October 23.
Additional allocations made through that phase could change the final distribution of securities issued.
The figures examined in this report concern the primary auction completed on October 21.
The final issuance total will need to be checked against the subsequent second-phase announcement.
