T-bill yields fall sharply across all maturities

• Latest auction brings bill yields back to levels seen prior to bumper policy rake hike in April 2022 

The Treasury bill yields fell sharply across all three maturities and by over 100 basis points (bps) under the two short-term bills, at the weekly bill auction held yesterday, where the Central Bank was seen comfortably raising the full amount of Rs.160.0 billion it offered.
The bill yields fell by 138 bps and 121 bps, respectively, 
under the three-month and six-month tenures, bringing the yield down to 11.97 percent and 12.20 percent, respectively while the benchmark 12-month bill gave up 78 bps to settle at 12.00 percent.
The Central Bank offered a total of Rs.160.0 billion in bills, at Rs.40.0 billion, Rs.70.0 billion and Rs.50.0 billion each under the three tenures, respectively, for which it received bids of Rs.134.23 billion, Rs.129.48 billion and Rs.143.47 billion, respectively.   
Yesterday’s auction brought the bill yields back to where they were soon prior to the bumper 700 bps policy rate hike by the Central Bank on April 8, 2022, to rein in the runaway inflation at the time.
The market watchers, commenting about the recent developments surrounding the government securities market, said the Central Bank as of late had been offering less than the maturing bill amounts at the auctions, in what was seen as a tactful move to bring the yields down, as it results in higher demand for bills, pushing the yields down.
However, it has also been seen raising the balance amount or closer to the balance under Phase II of the auction, more often under the 12-month tenure.
This left the three and six-month bills available only to be subscribed at the auction by the dealers, which also contributed to lower yields under the two tenures.  
However, in a departure from that practice yesterday, the Central Bank offered 25 percent of the aggregate amount originally offered at Phase II, which comes to an additional Rs.40.0 billion to be raised under the above average yields determined at Phase I of the auction held yesterday, under all three tenures.
The market commentators say the improved revenues and availability of a cash buffer with the government provide them with much more latitude to raise money at the auctions and influence the yields to come down.

under the three-month and six-month tenures, bringing the  yield down to 11.97 percent and 12.20 percent, respectively  while the benchmark 12-month bill gave up 78 bps to settle at  12.00 percent. The Central Bank offered a total of Rs.160.0 billion in bills,  at Rs.40.0 billion, Rs.70.0 billion and Rs.50.0 billion each under  the three tenures, respectively, for which it received bids  of Rs.134.23 billion, Rs.129.48 billion and Rs.143.47 billion,  respectively. Yesterday’s auction brought the bill yields back  to where they were soon prior to the bumper 700 bps policy  rate hike by the Central Bank on April 8, 2022, to rein in the  runaway inflation at the time. The market watchers, commenting about the recent  developments surrounding the government securities market,  said the Central Bank as of late had been offering less than  the maturing bill amounts at the auctions, in what was seen as  a tactful move to bring the yields down, as it results in higher  demand for bills, pushing the yields down. However, it has also been seen raising the balance amount  or closer to the balance under Phase II of the auction, more  often under the 12-month tenure. This left the three and six-month bills available only to  be subscribed at the auction by the dealers, which also  contributed to lower yields under the two tenures.  However, in a departure from that practice yesterday, the  Central Bank offered 25 percent of the aggregate amount  originally offered at Phase II, which comes to an additional  Rs.40.0 billion to be raised under the above average yields  determined at Phase I of the auction held yesterday, under all  three tenures. The market commentators say the improved  revenues and availability of a cash buffer with the government  provide them with much more latitude to raise money at the  auctions and influence the yields to come down.