Treasury bills the best investment option
View(s):Primary dealers offered bids at high rates sometimes over 43 per cent at this week’s Treasury bill auction by the Central Bank.
Treasury bill rates have surged to over 20 per cent in recent times ever since the Central Bank jacked up policy rates by 7 per cent a few months ago.
Commercial banks have also followed the trend and increased deposit rates to around 15 per cent from single digit rates last year. However there is a rush to invest in Treasury bills which currently offers the highest rate of return on investments.
At last Monday’s t-bill auction, the Central Bank had invited bids for Rs. 30 billion for 3-month bills and Rs.40 billion for 6-month bills. Dealers offered a total of Rs.36.6 billion for 3-month bills and nearly Rs.68 billion for 6-month bills. However the banking regulator only accepted Rs.3.5 billion in 3-month bills at an average yield of 28.18 per cent but accepted the full Rs.40 billion in 6-month bills offered at 26.51 per cent.
Banking sources said the rates were too high while Central Bank Governor Dr. Nandalal Weerasinghe was also reported to have said the market is overheated and rates should come down.
Among the dealers, NSB Fund Management Co Ltd offered the highest rate of 43.99 per cent followed by Acuity Securities Ltd’s offer of 43.52 per cent. Wealth Trust Securities Ltd offered a rate of 38.78 per cent while People’s Bank’s offer was 37.31 per cent.
All the 10 dealers offered bids at over 30 per cent which the Central Bank didn’t accept these high rates and instead accommodated bids at 26 per cent and 28 per cent for bills of both terms (three months and six months).
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