Most T-bill yields surpass 30%; 3-month yield tops 32.11%

The Treasury bill yields continued their ascent at yesterday’s bill auction held after the Central Bank raised its key rates once again by 100 basis points last week with the yields of 3-month and 6-month bills surpassing 30 percent with the benchmark 1-year bill coming at a striking distance from it. 

The bill auction held yesterday saw the 3-month bill yields climbing 403 basis points to 32.11 percent, 6-month bills rising by 227 basis points to 31.01 percent while the 1-year bill adding 176 basis points to 29.87 percent.

This week’s bill auction was under spotlight as it was the first one since the Central Bank raised key policy rates last week and the one after the bond auction held on Monday where the yields surged materially across the 3-year and 7-year bonds issued to raise Rs.70 billion. 

The Central Bank issued Rs.65 billion in bills across the three tenors, but accepted only Rs.53.7 billion, with the bulk or Rs.49.9 billion being accepted under the 3-month tenor, though only Rs.32 billion was offered under the shortest tenure bill. 

Although the Central Bank issued Rs.16.5 billion each under the 6-month and 12-month bills, the Central Bank accepted only a paltry Rs.1.80 billion and Rs.2.06 billion under each tenor. 

However, the Central Bank kept the two bills open for subscription until 3.30 p.m. on July 14, the day prior to the weighted average yield rates were determined at the auction. 

“The aggregate eligible amount for subscription from the said maturities would be the difference of accepted amount vs amount offered plus 25 percent of the aggregate amount offered at the auction,” the Central Bank said. 
The Central Bank last week said that this direct issuance window was made available for those mom-and-pop investors who might lose out in the secondary market due to the yield differential between the primary and secondary markets, as they are unable to participate directly in the primary auctions.