📈 T-Bill Rates Surge over 100bps Post-CBSL Hike; Auction Undersubscribed

The Central Bank of Sri Lanka (CBSL) kicked off a monetary tightening cycle, increasing the Overnight Policy Rate (OPR) by 100 bps to 8.75%—the first hike since the previous easing cycle concluded. • Policy Rate Adjustments: SDFR rose to 8.25% and SLFR to 9.25%. This reverses a portion of the 825 bps of cumulative easing seen since June 2023. • T-Bill Auction Yields: Rates hit a 79-week high across all tenors. The 91-day yield jumped 118 bps to 9.36%, the 182-day surged 143 bps to 9.68%, and the 364-day increased 134 bps to 9.83%. • Auction Performance: The weekly T-Bill auction was undersubscribed, raising only 68.26% (Rs. 95.56 Bn) of the Rs. 140 Bn on offer during Phase I, with a bid-to-offer ratio of 1.23x. • Secondary Bond Market: Turned bearish with subdued volumes as investors adopted a wait-and-see approach ahead of today's massive Rs. 240 Bn T-Bond auction. Global uncertainties, including Middle East tensions and volatile crude oil prices, continue to pressure rates upward. • Money & Forex Markets: Net money market liquidity surplus stood at Rs. 142.31 Bn. Meanwhile, the USD/LKR spot contract appreciated slightly, closing at LKR 324.50/326.00 against the previous day's LKR 325.50/327.00, on a traded volume of US$ 90.15 Mn. _Note: Based on provisional market and auction data._