T-bill yields continue to come down on hopes of early IMF deal

The Treasury bill yields continued to decline on rising optimism over the possibility of an early deal with the International Monetary Fund (IMF), after India and China last week signalled their willingness to support Sri Lanka’s debt restructuring exercise. 

The yields at yesterday’s auction declined across all three tenures between 17 basis points and 47 basis points, extending the weeks-long declining streak, which began in mid-December. 

The auction was fully subscribed as the Central Bank sold Rs.120 billion it offered—Rs.60.0 billion in three-month bills and Rs.30.0 billion each in six-month and 12-month bills.

The three-month bill yield slipped 17 basis points yesterday, settling below 30 percent for the first time in many months at 29.91 percent. This brought the cumulative decline in the yield to 273 basis points so far this year and 289 basis points since the current descent began seven weeks ago on December 14. 

The six-month bill yield also shed 35 basis points, taking the year-to-date decline in the yield to 348 basis points from the start of this year. The yield settled at 28.72 percent. 

The benchmark 12-month yield meanwhile gave up the most, falling by 47 basis points yesterday, settling at 27.78 percent. The cumulative decline for the 12-month bill in this year is 149 basis points.