The Public Debt Management Office sold Rs. 59.99 billion of the Rs. 60 billion in Treasury bills it offered at Wednesday’s auction, with weighted average yields rising at all three maturities, EconomyNext reported.
The headline figure conceals the more significant movement, which was in the maturity mix rather than the total.
The auction in full
| Maturity | Yield | Change | Offered | Sold | Share of offer |
|---|---|---|---|---|---|
| 91-day | 9.20% | +2 bp | Rs. 20.00bn | Rs. 30.12bn | 151% |
| 182-day | 9.37% | +1 bp | Rs. 25.00bn | Rs. 19.52bn | 78% |
| 364-day | 9.93% | +5 bp | Rs. 15.00bn | Rs. 10.35bn | 69% |
| Total | Rs. 60.00bn | Rs. 59.99bn | 100% |
Demand rotated back to the short end
The three-month bill was the smallest tranche on offer and was taken up at more than one and a half times the amount advertised. Both longer maturities fell short — the six-month by Rs. 5.48 billion, the twelve-month by Rs. 4.65 billion.
Those two shortfalls total Rs. 10.13 billion, against Rs. 10.12 billion of extra 91-day paper accepted. The debt office moved almost exactly the undersubscribed amount into the short end, finishing Rs. 10 million below its ceiling.
That is a direct reversal of the 9 September auction, when the three-month sold barely half its offer and the twelve-month drew 169 percent.
The reallocation was authorised in advance. The offer notice published by the Ministry of Finance on 19 September states that the PDMO “may accept a higher or lower amount than the offered amounts for each maturity by reallocating amounts between the maturities… but without exceeding the total amount on offer.”
A third consecutive cut to the offer
The amount on the table has been reduced for three weeks running — Rs. 80 billion on 9 September, Rs. 70 billion on 16 September, and Rs. 60 billion now, a quarter less than a fortnight ago.
The pace of the repricing has also slowed sharply. Yields rose 15, 12 and 11 basis points at last week’s auction; this week the increases were 2, 1 and 5. The comparison figures EconomyNext gives — 9.18, 9.36 and 9.88 percent — match that sale exactly, confirming this is the next auction in the same weekly series.
The twelve-month bill was the only maturity to move materially, and the curve re-steepened as a result: the spread between the 91-day and 364-day bills widened from 70 to 73 basis points.
Settlement and issue fall on 25 September. The six- and twelve-month bills remain available on tap, the facility the debt office has used repeatedly this year to place paper left unsold at auction.
In the currency market the same day, the rupee was quoted at 329.50/75 to the US dollar, weaker than the previous session’s 329.30/60 but still firmer than the 330.90/331.25 recorded on 18 September.
Not reported
EconomyNext does not give total bids received, so no bid-to-cover ratio can be calculated for this auction and the strength of demand behind the accepted amounts cannot be assessed. It does not say whether the reduced offer reflects the government’s cash position or a deliberate response to the rising cost of borrowing, and no official explanation for the three-week reduction has been published.
