Sri Lanka sold Rs 80.61 billion of Treasury bills at Wednesday’s auction against Rs 100 billion offered, with almost the entire sale concentrated at the three-month maturity, EconomyNext reported at 4.37 p.m., citing Public Debt Management Office data.
| Tenor | Offered | Sold | Fill | Yield |
|---|---|---|---|---|
| 3-month | Rs 40bn | Rs 70.39bn | 176% | 9.2% (reported up 2bp) |
| 6-month | Rs 35bn | Rs 3.92bn | 11% | 9.44% (unchanged) |
| 12-month | Rs 25bn | Rs 6.29bn | 25% | 9.95% (unchanged) |
| Total | Rs 100bn | Rs 80.61bn | 80.6% |
The three components sum to Rs 80.60 billion against the Rs 80.61 billion reported for the sale — a one-hundredth-of-a-billion gap that resolves as rounding. The six- and twelve-month bills remain available on tap.
The debt office added supply exactly where demand had already failed
This is the third auction in a sequence this desk has tracked, and the pattern across it is unusually clear.
| Auction | Offered | Sold | Fill |
|---|---|---|---|
| 7 October | Rs 80bn | Rs 80bn | 100% |
| 14 October | Rs 90bn | Rs 66.12bn | 73.5% |
| 21 October | Rs 100bn | Rs 80.61bn | 80.6% |
The office has raised the offer by Rs 10 billion a week for three weeks. The amount the market has actually taken has gone 80.0 → 66.12 → 80.61 — an average of about Rs 75.6 billion a week, moving independently of the offer. Wednesday’s sale raised almost exactly what the Rs 80 billion auction raised a fortnight ago, from an offer 25% larger.
Where the extra Rs 10 billion was placed is the striking part. Comparing the two offers:
- 3-month: Rs 40bn last week, Rs 40bn this week — unchanged
- 6-month: Rs 30bn → Rs 35bn (+5bn)
- 12-month: Rs 20bn → Rs 25bn (+5bn)
The entire increase went to the six- and twelve-month tenors — the two the market had already declined to fill the week before. It declined them again, more heavily: the six-month took 11% of its allocation against 28% a week earlier.
The maturity profile is collapsing into the short end
Tracked across the three auctions, the tenor-by-tenor fill shows demand migrating decisively forward:
| Tenor | 7 Oct | 14 Oct | 21 Oct |
|---|---|---|---|
| 3-month | 126% | 100% | 176% |
| 6-month | 118% | 28% | 11% |
| 12-month | 32% | 87% | 25% |
And the three-month share of each week’s sale:
- 7 October: Rs 44.11bn of Rs 80bn — 55%
- 14 October: Rs 40.19bn of Rs 66.12bn — 61%
- 21 October: Rs 70.39bn of Rs 80.61bn — 87%
Nearly nine rupees in ten raised on Wednesday must be refinanced in January. A debt office that funds itself at three months is not reducing its borrowing requirement; it is moving it closer. Each week the short-end share rises, the January refinancing block grows — and it grows at whatever yields prevail then, not at Wednesday’s.
The six- and twelve-month yields have now been pinned at 9.44% and 9.95% for three consecutive auctions while the quantities taken at those rates have collapsed. That is the signature of a price the market will not transact at in size rather than one it is bidding down: the rate is not moving, so the volume is doing the adjusting.
A yield figure that does not reconcile
EconomyNext reports the three-month bill as “up 2 basis points at 9.2 percent.” Those two statements cannot both be right.
EconomyNext itself reported the three-month at 9.30% at the 14 October auction — up four basis points from 9.26% the week before — and the following day’s tap was also done at 9.30%. From that base:
- If the yield rose 2 basis points, the level is 9.32%, not 9.2%.
- If the level is 9.2%, the yield fell about 10 basis points, and “up” is wrong.
The more likely reading is the first. Both other tenors are reported at exactly their previous levels, so the published figures are being carried forward accurately elsewhere in the same filing, and a stated direction of travel is harder to get wrong than a decimal. A “9.32” losing its middle digit to read “9.2” is the simpler error.
This desk has not adopted either value. No second verified newsroom filed on Wednesday’s auction, the Central Bank’s own rate pages returned HTTP 403 and 404 to attempts made while preparing this report, and the aggregator sites carrying the story reproduce EconomyNext’s wording verbatim rather than the underlying data. The discrepancy is recorded here as unresolved, and the table above reproduces the figure as published.
Resolved the following day. The 22 October tap sale was done at 9.32% on the three-month, confirming the derivation in this section and not the printed 9.2%. See the update below.
What is not in doubt is the direction: the only yield that moved anywhere on the curve was the three-month, as it was a week ago.
Update, 22 October: the tap sale settles the 9.2% question
The following day’s tap offering resolves the discrepancy recorded above, and it resolves it in favour of the derivation rather than the published figure.
Sri Lanka sold a further Rs 2,282 million of Treasury bills on tap at average rates of 9.32%, 9.44% and 9.95% for the three-, six- and twelve-month maturities, EconomyNext reported at 4.08 p.m., citing the public debt management office. Settlement is 23 October. Total bills sold in the week come to Rs 82.893 billion.
The three-month rate is 9.32% — exactly the value this desk derived above from the “up 2 basis points” statement, and not the 9.2% the auction report printed. A tap offering is made at the auction’s own average rates, so this is the same number restated a day later by the same source. The simpler error was the one proposed: a 9.32 losing its middle digit.
That discrepancy is now closed. The six- and twelve-month tap rates, at 9.44% and 9.95%, are identical to the auction’s — a fourth consecutive week unchanged at both tenors.
What the tap recovered, and what it did not
The open question above was whether the Rs 19.39 billion left unsold would be recovered on tap, as Rs 7.206 billion was the previous week. The answer is Rs 2.282 billion, or about 11.8% of it. Roughly Rs 17.1 billion of the offer was simply not taken.
That is a sharp fall from the previous week’s tap, and it points the same way as the auction itself: the quantities are adjusting, not the rates.
The week’s total also reconciles. Rs 80.61 billion at auction plus Rs 2.282 billion on tap is Rs 82.892 billion against the Rs 82.893 billion reported — the same one-thousandth-of-a-billion rounding gap noted in the auction table above.
EconomyNext does not break the Rs 2.282 billion down by maturity, so how much went at each rate is unknown. Since the three-month was over-allotted at auction, the three-month figure is best read as the reference rate carried into the tap report rather than evidence that three-month paper was sold on tap.
Not reported
The auction filing gives no bid-to-cover ratio, no total value of bids received, and no weighted average yield across the full sale, so demand at the three-month tenor cannot be quantified beyond the Rs 70.39 billion accepted — a figure that is itself 76% above the amount offered and therefore reflects the debt office’s willingness to over-allot as much as the market’s appetite.
It does not say whether the Rs 19.39 billion left unsold will be recovered on tap, as Rs 7.206 billion was last week, nor whether the office intends to raise the offer again. It offers no explanation for why six-month demand has fallen to a ninth of its allocation at an unchanged yield, and no official is quoted.