Sri Lanka Treasury bill yields bottom out

Aug 12, 2009 (LBO) – Sri Lanka 3-month Treasury bill yields showed signs of bottoming out at Wednesday’s auction with 6 and 12 month yields up marginally, despite the government’s debt office not accepting the entire offered volume from the market.

Since a float of the currency ended a balance of payments crisis in March 2009, the monetary authority has been selling down its bill stock. The 3-month yield fell by one basis point to 10.57 percent, the 6-month yield edged up two basis points to 11.43 percent and the 12-month yield went up three basis points to 11.98 percent.

The government’s debt office, which is a unit of the Central Bank, said 11.5 billion rupees of bills were offered but only 10.35 billion rupees of bids were accepted from the market.

Sri Lanka’s central bank tends to print money to buy Treasury bills direct from auctions, creating inflation in the country.