As the calendar year draws to a close, yields on government treasury bills have edged upwards, reflecting mounting pressures within Bangladesh’s financial system. The upward movement has been particularly pronounced in medium- and longer-tenure treasury bills, a development analysts attribute largely to banks’ growing reluctance to lock surplus liquidity into government securities ahead of year-end balance sheet closures.
According to the latest auction results released by Bangladesh Bank on Sunday, the cut-off yield on 91-day treasury bills remained unchanged at 10.55 per cent, signalling continued demand for short-term instruments. However, yields on longer tenures rose noticeably. The 182-day treasury bill yield increased from 10.21 per cent to 10.57 per cent, while the 364-day bill saw a modest rise from 10.69 per cent to 10.70 per cent.
Through this auction, the government raised a total of Tk 70 billion, funds that will be channelled towards partially financing the current fiscal year’s budget deficit. Officials at both the Ministry of Finance and Bangladesh Bank have emphasised that treasury bills remain a critical instrument in managing public borrowing, particularly in the final months of the fiscal year when expenditure pressures tend to intensify.
A senior Bangladesh Bank official explained that, with the year-end closing on 31 December approaching, many commercial banks are hesitant to commit funds to longer-term treasury bills. From an accounting perspective, banks are keen to maintain strong balance sheets and ensure sufficient immediate liquidity, making longer-tenure investments less attractive at this juncture. This caution has been most evident in the reduced appetite for 182-day and 364-day bills, directly contributing to the rise in their yields.
Beyond year-end considerations, broader political and economic factors are also shaping investment behaviour. Banks are reportedly adopting a conservative stance in anticipation of the national parliamentary election scheduled for 12 February 2026. Potential political uncertainty, coupled with ongoing macroeconomic challenges, has prompted financial institutions to favour shorter-term, more liquid investments over longer commitments.
Market observers suggest that, given these dynamics, the upward trend in treasury bill yields could persist over the coming weeks. Unless liquidity conditions ease significantly or banks regain confidence in longer-term placements, yields on medium- and long-term bills may remain elevated.
At present, the government issues treasury bills through auctions in four tenures—14 days, 91 days, 182 days and 364 days—providing flexibility in short-term borrowing. Alongside these, five categories of government bonds with maturities of two, five, ten, fifteen and twenty years are actively traded in the market, offering longer-term investment options for institutional and retail investors alike.
In sum, economists believe that a convergence of year-end financial pressures, election-related caution and prudent liquidity management by banks lies at the heart of the current rise in treasury bill yields, underscoring the delicate balance between government financing needs and banking sector stability.