Government Securities Market

Treasury Bills and Treasury Bonds Market

For budgetary purposes raising of domestic currency debt by the Government of Sri Lanka is mainly made through,

Treasury bills (T Bills) which is a short term debt instrument issued under the Local Treasury Bills Ordinance No. 8 of 1923 (as amended) and;

Treasury bonds (T Bonds) which is a medium  to long term debt instrument issued under the Registered Stock and Securities Ordinance No. 7 of 1937 (as amended).

As the agent of the Government of Sri Lanka, the Public Debt Department of the Central Bank of Sri Lanka (CBSL) is responsible for the issuance of Treasury bills and bonds, and the debt service payments comprise interest/coupon payments and the maturity payments.  

The Treasury bill market is another segment of the Money Market. Treasury bills are highly liquid money market instruments that provide financial institutions with an alternate source of liquidity and investment. Furthermore, interest rate movements in the Treasury bill market provide a benchmark for the short-term credit market. Hence, changes in the volumes and rates in the Treasury bill market affect the cost, profitability and liquidity of financial institutions. Treasury bills are also the main securities used as collateral by the Central Bank in the conduct of its open market operations.


The Main Features of Treasury Bills and Bonds

   T Bill maturities are available with 91 Days, 182 Days and 364 Days whereas, T Bond Maturities are available with 2- 30 years

   T Bills, issued at discounted prices are paid with Face Value at the Maturity whereas, the T Bonds carry bi-annual coupon payments  in addition to the Face Value paid at maturity.

   Yield rates are determined by the market 

   Tradable instrument in the secondary market

   Issued in scripless form 


Benefits of Investing in Treasury Bills and Bonds

   It is an absolutely risk-free investment, since issued by the sovereign government. 

   Since T bills and T Bonds are tradable in the secondary market, it is possible to obtain instant liquidity by selling them in the market.

   All receipts of interest and maturity proceeds of foreign investments are fully repatriable.

   It is possible to have a joint investment with some other person or persons.

   Govt Securities are not subject to withholding tax .   

   The CBSL maintains these investments in state of the art Central Depository System (CDS) connected to fully automated Scripless Security Settlement System.


Investments in Treasury Bills Treasury Bonds

T Bills and T Bonds can be purchased at any time from the secondary market through Primary Dealers (PDs) or Licensed Commercial Banks (LCBs) registered with the CBSL. PDs are the institutions appointed by the CBSL to participate in the primary auctions  of Government securities.  T Bills and T Bonds can also be purchased by bidding in the primary auctions through PDs. 

For the purpose of fund transfers, non-resident investors can open a Rupee account named “Inward Investment Account (IIA)” in an LCB in Sri Lanka.

(more information of the TIERA account can be found in )

A Securities Account in the CDS (The Title Registry) has to be opened in the name of the investor by the LCB/PD and recording of ownership/title of the security following any transaction will take effect on a real time basis.

Foreign investors in aggregate can purchase up to 5 % of the total outstanding Treasury bills and Treasury bonds at any given time. Eg. As at December 31, 2020, the total Treasury bonds and Treasury bills outstanding stock was Rs. 7,341 bn. Accordingly, investments up to Rs. 367 bn in total of T Bills and T Bonds are allowed for foreign investors. Eligible foreign investors are permitted to purchase, sell or transfer Treasury bonds with any maturity period. 

Interest and maturity proceeds relating to T Bills and T Bonds are credited on due dates to the investor's account through LCB/PD who are responsible to effect payments on due dates to their customers/investors of Govt Securities.


Obtaining information on Treasury Bonds

   Details on available Treasury Bills and bonds and prevailing market rates can be obtained from LCBs, PDs and CBSL. 

   Details on current auctions can be obtained from LCBs and PDs and Public Debt Dept of CBSL. 

   Details on Govt Securities depository and settlements and  can be obtained from the Public Debt Department of CBSL.


FAQ on Government Debt Securities