Central Bank to downsize weekly T-bill auction to below Rs.50bn

As an effort to unwind the current monetary stimulus, the Central Bank (CB) expects to downsize weekly Treasury bill auction to below Rs.50 billion from the current range of Rs.70-75 billion.

The CB is considering to meet this downsizing partly by converting part of maturing Treasury bills to Treasury bonds.

In addition, the direct issuance window of Treasury bonds and new Treasury bill auction system are expected to build opportunities to trim rollover volumes of Treasury bills and near-term Treasury bonds.

The CB is also mulling on introducing an app.-based Treasury bond issuance for benchmark maturities of 5, 10, 15, 20 and 30-year maturities.

The country’s short-term debt stock spiked to 21.46 percent of the total outstanding debt from 15.31 percent at-end of 2019. The CB noted that the increase in short-term debt has been mainly driven by the reliance on Treasury bills to meet the government’s financing requirements in the pandemic period.