The Public Debt Management Office raised the full Rs. 70,000 million it offered at Wednesday’s Treasury bill auction, with bids running to more than two and a half times the amount on the table — but weighted average yields rose at all three maturities, Hiru News reported on Friday.
Total bids reached Rs. 171,601 million, a bid-to-cover ratio of 2.45. Settlement is set for 18 September 2026.
The auction in full
| Maturity | Yield | Change | Offered | Bids received | Cover |
|---|---|---|---|---|---|
| 91-day | 9.18% | +15 bp | Rs. 25,000mn | Rs. 63,411mn | 2.54× |
| 182-day | 9.36% | +12 bp | Rs. 25,000mn | Rs. 53,833mn | 2.15× |
| 364-day | 9.88% | +11 bp | Rs. 20,000mn | Rs. 54,357mn | 2.72× |
| Total | Rs. 70,000mn | Rs. 171,601mn | 2.45× |
Every tenor was fully accepted. Both columns sum exactly to the reported totals.
What changed since last week
The comparison figures Hiru gives for the previous auction — 9.03%, 9.24% and 9.77% — match exactly the yields recorded at the 9 September auction, which confirms this is the next weekly sale in the same series.
That earlier auction is what makes this one interesting. On 9 September the debt office offered Rs. 80 billion split Rs. 35bn / Rs. 25bn / Rs. 20bn, and the three-month bill sold only half its offer while the twelve-month drew 169 percent. Demand had rotated decisively out of short paper.
The response was to shrink the short end. This week’s offer was Rs. 70 billion split Rs. 25bn / Rs. 25bn / Rs. 20bn — the three-month allocation cut by Rs. 10 billion, the other two left unchanged.
On that reduced offer, the three-month bill sold out. But it did so at 9.18 percent, fifteen basis points above the previous week — the largest move of the three, and the second consecutive rise at the short end after the 7 basis point increase recorded on 9 September.
So the undersubscription has been cleared, and the composition problem with it. What replaced it is a price: the government is now paying more across the curve, and paying most at the maturity it had to cut back.
Reading the cover ratio
A 2.45 times cover looks comfortable, and the headline writes itself as strong demand. It is worth being precise about what it measures.
Bids received are what investors were willing to buy at some price, not at the previous week’s price. Yields rose at every maturity despite that cover, which means the clearing level moved against the issuer even with bids at two and a half times the offer. A large book and a rising yield in the same auction indicate investors bidding in size but bidding cheap.
The curve also flattened slightly. The spread between the 91-day and 364-day bills narrowed from 74 basis points to 70, because the short end rose fastest. The whole curve shifted up, with the near maturities moving furthest — the opposite of last week, when short paper was the maturity investors would not take.
Context
Treasury bill yields sit against a wider repricing in government securities. The rupee was quoted around 330.70 to the US dollar with bond yields reversing earlier this week, and public debt stood at Rs. 97,952 billion in the most recent PDMO statement.
Not reported
Hiru does not give the amount offered at the previous auction or the split across maturities, so the Rs. 10 billion reduction at the short end is established here by comparison with the 9 September figures rather than stated in the report. It does not say whether the total offer was cut because of the earlier undersubscription or for unrelated cash-management reasons.
Nor does it report whether the debt office exercised its option to sell additional bills after the auction closed, a facility it has used repeatedly this year, or give the total outstanding Treasury bill stock after settlement.
EconomyNext appears to have reported the same auction with matching figures, but no accessible article URL could be confirmed at the time of writing, so it is not cited here. A Daily FT column indexed under a current date was checked and rejected: its body describes a Rs. 160 billion auction with yields above 10 percent and references dated to 2024, and it is not this week’s sale.
