A primer on Treasury Bonds

 March 24, 2015The Central Bank of Sri Lanka held a 30-year Treasury bond auction on 27 February 2015. It offered to sell bonds with a face value of Rs. 1 billion carrying an annual interest rate of 12.5%. It received bids for about Rs. 20 billion and accepted about Rs. 10 billion. The auction accepted yields up to 12.50%. The average yield accepted at the auction was 11.73%.
The above auction has become a subject of extensive public debate. The purpose of this article is to discuss the basics of government securities to help the public understand the economic meaning of the various concepts, terms and numbers associated with a bond auction. The information about this particular auction will be used for illustrative purposes, and I will discuss the concepts mostly in relation to Treasury bonds.
What are government securities?
A Primer on Treasury Bonds by Thavam Ratna