CBSL managed to sell the target volume at T-Bills auction but over loaded for 91Days

CBSL managed to sell LKR 140Bn at the primary auction, which is the targeted volume planned by CBSL initially. They were not successful at last week’s auction. The rates were almost the same as last week, only 91Days bill rate fell by 2 basis points.

Selling 77% of the T-Bills for 91 days implies, CBSL is not happy with the bids (rates) demanded for 182 days and 364 Days by the investors. Borrowing short-term (91 days) carries rollover risk (re-finance risk) but in downward interest rate scenarios, it is justifiable to borrow short-term until rates reach a lower level.