Gayan Lakmal Alwis, CFA, Colombo (2026)

04/06/2026

6-Month T Bills reach double-digit levels after 87 weeks

This week's T Bill auction crossed an important threshold. 182-day weighted average yield closed at 10.01% - for the first since 03 Oct 2024. The 364-day also crossed over, finishing at 10.02%.

Pace of yield increases has slowed. However, this is because we saw a sharp adjustment last week, following Central Bank of Sri Lanka policy rate hike.

• 91 days: +48 bps → 9.84% → 85% accepted
(vs +118 bps → 110% last week)

• 182 days: +33 bps → 10.01% → 84% accepted
(vs +143 bps → 32% last week)

• 364 days: +19 bps → 10.02% → 48% accepted
(vs +134 bps → 33% last week)

Acceptance levels have recovered. 182-day fill rate jumped from 32% to 84% - proving that investors are drawn at the right yield.

However, overall auction acceptance levels still remain below 100% - a bid-to-cover of 1.52x with 79% overall fill rate.

Crossing the 10% threshold is a psychological marker more than a technical one.

But it reminds us how far rates have moved in a short period. 182-day was at 8.25% on 20th May 2026, i.e. a 176 bps spike in just two weeks.

21/03/2026

Fun Fact:
For the folks in Colombo Stock Exchange, the biggest capital gain over the past few weeks have been the fuel left in our tanks (if any) 😀

On a serious note:
Fuel prices are revised up by ~26%.

09/03/2026

Money market just reached a level never seen before.

On 6th Mar 2026, Total Outstanding Market Liquidity (TOML), i.e. Central Bank of Sri Lanka's measure of net overall surplus liquidity in the banking system, reached LKR 413 Bn.

An all-time high.

Four years ago, TOML was at a massive deficit of LKR 757 Bn. The banking system was a net borrower from CBSL. That was April 2022, i.e. peak of the financial crisis.

The reversal from that to now is LKR 1,170 Bn.

When TOML rises, short-term rates usually face downward pressure and banks have greater capacity and incentive to disburse credit into the real economy.

Given the current global uncertainty and the spillover effect of that on our domestic markets, such ample levels of liquidity provides cushion and comfort to absorb short-term shocks.

What does this massive liquidity surplus tells you?
• Further dip in T Bill rates?
• Private sector credit to trend higher?
• Reflation to accelerate?
• Pressure on LKR?

Drop your views below.

P.S.
If you are publishing my analysis in your media, please be kind enough to attribute and give due credit. Thank you.

16/01/2026

Double Whammy on Low Interest Rates?

This Monday, two seemingly unrelated outcomes signalled a possible (further) uptick in interest rates.

1. CBSL made an upward revision on Finance Company deposit rate caps
As per the new Central Bank of Sri Lanka guidelines, deposit rate caps for terms up to 2 years have been revised upwards by 100 bps.

For e.g.:
Earlier, cap on Finance Company (FinCo) deposits of 1 year was 364 Day T Bill + 2%. Now, it's set at 364 Day T Bill + 3%. FinCos will now be able to offer rates of up to 11.17% (approx).

Also, cap on deposits of 2 years and above has been lifted. Now, FinCos can offer competitive rates, based on their funding strategy.

2. T Bond auction rates spiked on mid-tenures

Earlier, 9-year T Bond (15th Jun 2035 maturity) was trading around 10.75% levels. But auction weighted average spiked to 11.08% levels. As per market sources, cut-off rate was as high as 11.75% levels!

Even at such high cut-off levels, only 73% (LKR 55 Bn) out of the offered (75 Bn) was raised from this maturity.

TL;DR

Taken together, this shows either:
(a) Early signs of a sustained uptick in market interest rates. This doesn’t mean rates will continue to spike at large. Ideally, it shall stabilise, gradually, at a new high. But, the direction clearly is upwards.

(b) Temporary dislocation of liquidity vs. term, along with funding pressure (due to fiscal policy), coupled with high credit growth has resulted in a short-term spike in market rates, which should (at least partly) be corrected in the coming weeks.

What's your guess - (a) or (b)?

Let me know in comments.

19/12/2025

BREAKING: IMF Approves USD 206 Mn in Emergency Financial Support

International Monetary Fund Board approved USD 206 Mn under the Rapid Financing Instrument for Sri Lanka, to support urgent BOP and fiscal pressures.

While Govt. remains committed to the IMF Extended Fund Facility program, the 5th review due in Dec 2025 has been deferred to early 2026.

As per IMF:
• Central Bank of Sri Lanka (CBSL) will continue to refrain from "money printing" (monetary financing of the budget).

• CBSL stands ready to provide liquidity support to the financial system, if needed.

• All emergency spending will be in compliance with the Public Financial Management Act.

• Spending is supported by enhanced monitoring and regular public reporting.

• IMF stands with the people during this difficult time and will continue to support recovery and reconstruction efforts.

Follow me Gayan Lakmal Alwis, CFA for more insights on economy and investing.

18/12/2025

IMF to approve Sri Lanka's RFI on 19th Dec 2025?

Two weeks ago, Govt requested USD 200 Mn under International Monetary Fund Rapid Financing Instrument, which includes a window for urgent BOP needs due to natural disasters.

This is a new facility, on top of the current IMF Extended Fund Facility.

IMF Board will discuss and hopefully approve this on 19th Dec.

07/12/2025

Stock market is a place where “People with money” meet “People with experience”.

After some time, "people with experience" get the money and “people with money” get experience.

Note: Video copyright by Showtime. Used purely for educational purposes

05/12/2025

BREAKING: IMF considers Govt.'s urgent request for USD 200 Mn additional funding

Govt has requested financial assistance from International Monetary Fund for ~USD 200 Mn under "Rapid Financing Instrument (RFI)".

This is a new facility, on top of the current IMF Extended Fund Facility (EFF).

As per IMF - "RFI provides rapid, low-access financial assistance to countries facing urgent balance of payments (BOP) needs that, if not addressed, would result in an immediate and severe economic disruption".

RFI includes a window for urgent BOP needs arising from natural disasters where damage is assessed to be equivalent to or exceed 20% of GDP.

RFIs carry a single disbursement, no reviews and repayable over 3-5 years.

As per IMF, this request is under consideration and subject to approval by the IMF Board.

Just hearing this? Follow me Gayan Lakmal Alwis, CFA for more insights on economy and investing.

10/11/2025

Can the 1.2 Trillion Govt. cash buffer sway interest rates?

Govt. Treasury had LKR 1,205 Bn of cash as of end Aug 2025. This is more than twice the budget (510 Bn), and 159% vs. Aug 2024.

What used to be a giant overdraft few years ago, is now a cash reserve.

This massive cash pile provides a buffer (or a war chest?) for Govt. to manage the roll-over risk of maturing T Bills and T Bonds.

Govt. stated they plan to settle LKR 500 Bn of maturing T Bills using this cash reserve - which will reduce the roll-over pressure, i.e. allow the T Bill rates to remain at current levels.

TL;DR
• Massive over-performance of fiscal policy enables relaxation of monetary policy, amidst gradual up-tick of inflation.

• In English, this means GSec interest rates are likely to be lower for longer.

Seeing for the first time how I connect the dots ?
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23/09/2025

Sri Lanka’s Deposit Insurance Scheme

When?
Sri Lanka Deposit Insurance Scheme (SLDIS) was introduced in 2010 and is administered by Central Bank of Sri Lanka (CBSL).

Why?
To safeguard depositors and enhance confidence in licensed banks and finance companies.

How?
• A protection mechanism to compensate depositors if a member institution fails.
• Covers all Licensed Commercial Banks, Licensed Specialised Banks, and Licensed Finance Companies.

Who?
SLDIS covers:
• Depositors: Individuals, companies, partnerships, sole proprietors, joint account holders (each counted separately), and beneficiaries of deceased depositors.
• Deposits: Savings, current, fixed deposits - all currencies
• Insurance Limit: Up to LKR 1.1 Mn per depositor, per institution

Fund Size
As at end 2024, the SLDIS covered 62 institutions and had a total fund size of Rs. 136.8 Bn. Claims, if any, will be paid out of this fund.

Claim Timelines
• Deposit insurance is triggered upon cancellation of licence.
• Depositors must submit claims within 6 years.
• Compensation is paid by CBSL upon verification.

Past Compensations
Depositors of seven (07) finance companies where licences was cancelled/suspended, was paid a total of LKR 31.3 Bn (89% of the insured value of the deposits), covering 74,440 depositors.
1. Central Investments and Finance PLC
2. Standard Credit Finance Limited
3. TKS Finance Limited
4. The Finance Company PLC
5. ETI Finance Limited
6. Swarnamahal Financial Services PLC
7. Bimputh Finance PLC

Why SLDIC Matters?
1. Protects small depositors
~97% of Sri Lanka's 62 Mn deposits fall below LKR 1.1 Mn.

2. Supports financial stability
By reducing panic = preventing systemic risk.

3. Strengthens trust
Gives confidence to depositors to use banking channels.

But?
SLDIS is not a silver bullet.

It is a vital safeguard that protects depositors, strengthens financial stability, and upholds confidence in Sri Lanka’s banking system.

Did you know about SLDIS before?
Pls do let me know in the comments.

Follow me Gayan Lakmal Alwis, CFA for more insights on investing.

Gayan Lakmal Alwis, CFA

04/06/2026

21/03/2026

09/03/2026

16/01/2026

19/12/2025

18/12/2025

07/12/2025

05/12/2025

10/11/2025

23/09/2025

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