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Central Bank to auction Rs. 300bn in Treasury bills and bonds from tomorrow
View(s):The Central Bank of Sri Lanka (CBSL), amidst lower tax revenue and rising government spending, is offering an unusually large sum of Rs 300 billion in both Treasury bills and bonds at two auctions next week.
The record amount of raising funds through the issuance of both Treasury bills and bonds came in the wake of the government struggling to finance its recurrent expenditure and limited currency infusion by the CBSL in recent months, banking sources said.
“Usually, CBSL issues fresh bonds and bills to repay existing ones. In a way, it’s like rolling over debt as new bills are issued to settle previous ones,” a banking source noted while indicating that market rates were coming down in recent weeks and this might have played a role in offering such a huge amount in Treasury bills and bonds ahead of festival season.
The Government has already said that printing of currency was not an option as it conflicts with International Monetary Fund (IMF) programme for Sri Lanka.
At tomorrow’s auction, a total of Rs. 180 billion worth of Treasury bonds will be offered for sale followed by the March 15 auction of Rs. 120 billion in Treasury bills, according to an official Central Bank announcement. Of the Rs 180 billion Treasury bonds, Rs 70 billion is offered at the coupon rate of 22 percent that would mature on November 15, 2024, while the outstanding amount -Rs 110 billion is offered at 18 percent with the maturity date being May 1, 2027.
The last Treasury bond auction was held on February 27. In that auction, Rs. 4 billion was offered and raised at 29.37 percent interest.
At the last Treasury bill auction of March 8, Rs.85 billion was offered and accepted at interest rates ranging from 26 percent to 28 percent.
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