Government Raises Tk 75 Billion Amid Mixed Treasury Bill Yield Movement

The yields on treasury bills (T-bills) followed a mixed trend this Sunday, as banks appeared hesitant to invest their surplus liquidity into risk-free government securities. This cautious approach comes ahead of the year-end financial closing on December 31, a time when banks traditionally review their positions.

According to auction results, the cut-off yield — often considered the interest rate — on 91-day T-bills rose to 10.14% from 10.07%. Meanwhile, the 182-day T-bill yield slightly decreased, dipping to 10.14% from 10.15%. Interestingly, the yield on 364-day T-bills increased to 10.24% from 10.10%.

Despite the mixed yield trends, the government successfully raised Tk 75 billion through the issuance of three types of T-bills, aiming to finance its growing budget deficit.

A senior Bangladesh Bank (BB) official, explained the situation by stating that most banks are reluctant to park their excess liquidity in T-bills before the year-end closing. This reluctance stems from the need for banks to keep sufficient reserves for their year-end balance sheet adjustments. The official also hinted that the current trends in T-bill yields could persist in the coming weeks.

Currently, the central bank auctions four different types of T-bills to manage government borrowing from the banking system. These include T-bills with maturity periods of 14, 91, 182, and 364 days. In addition, five types of government bonds, with tenures of 2, 5, 10, 15, and 20 years, are also traded in the market.

The central bank’s cautious approach and the government’s borrowing needs suggest that T-bill yields may remain volatile in the short term, depending on liquidity flows and market sentiment.