Yields on Bangladesh’s treasury bills (T-bills) witnessed a notable increase on Sunday, immediately following the introduction of revised guidelines for primary dealers (PDs). The changes, designed to invigorate both the primary and secondary government securities markets, have had a visible impact on investor behaviour.
The cut-off yield, widely regarded as the effective interest rate, on 91-day T-bills rose sharply to 10.40 per cent from the previous 10.05 per cent. Similarly, the 182-day bills climbed to 10.34 per cent, up from 10.23 per cent, while the 364-day T-bills edged higher to 10.49 per cent from 10.34 per cent, according to the latest auction results.
On this occasion, the government successfully mobilised Tk 75 billion through the issuance of three types of T-bills, aiming to partially bridge the budget deficit.
A senior official from Bangladesh Bank explained the recent surge, stating, “Under the new PD guidelines, only PD banks are eligible to participate in auctions by submitting bids, which has contributed to the upward pressure on T-bill yields.”
Earlier, the central bank had selected 24 primary dealers to enhance liquidity and trading efficiency in the secondary market for government-approved securities. These dealers play a crucial role in stabilising the market and facilitating government borrowing.
Currently, the government issues four main types of T-bills through regular auctions, with varying maturities to manage short-term borrowing requirements. In addition to T-bills, five categories of government bonds, with tenures ranging from two to twenty years, are actively traded, offering longer-term investment options for banks and institutional investors.
Recent T-Bill Auction Results
| T-Bill Type | Previous Yield | Current Yield | Maturity |
|---|---|---|---|
| 91-day | 10.05% | 10.40% | 3 months |
| 182-day | 10.23% | 10.34% | 6 months |
| 364-day | 10.34% | 10.49% | 12 months |
Financial analysts noted that the new PD framework is intended to enhance competitive bidding, improve transparency in the auctions, and ensure more efficient price discovery in the market. Market observers will closely monitor whether this yields increase will persist in upcoming auctions or stabilise once PD participation normalises.
The recent uptick reflects both the tightening of participation rules and the market’s response to government efforts to manage borrowing costs amid fiscal pressures, signalling a potentially more active and dynamic T-bill market in the months ahead.