Yields on treasury bills (T-bills) eased on Sunday as commercial banks opted to deploy surplus liquidity into risk-free government securities, reflecting subdued private sector borrowing ahead of the forthcoming national elections.
The central bank’s latest auction results revealed a modest decline across all tenors. The cut-off yield—the effective interest rate—on 91-day T-bills fell to 10.24 per cent from 10.40 per cent at the previous auction. Similarly, the yield on 182-day bills dropped to 10.28 per cent from 10.34 per cent, while the 364-day instruments saw a sharper fall to 10.34 per cent from 10.49 per cent.
The government mobilised a total of Tk 75 billion through the issuance of these three types of T-bills, seeking to partially bridge the fiscal deficit. Analysts noted that the modest decline in yields signals strong demand for government paper, underpinned by banks’ cautious lending stance and a lacklustre private credit environment.
| T-Bill Tenor | Previous Yield (%) | Current Yield (%) | Change (bps) | Amount Raised (Tk billion) |
|---|---|---|---|---|
| 91 days | 10.40 | 10.24 | -16 | 25 |
| 182 days | 10.34 | 10.28 | -6 | 25 |
| 364 days | 10.49 | 10.34 | -15 | 25 |
“Banks are actively seeking secure avenues to invest their surplus funds, with treasury bills offering a safe and liquid option,” a senior Bangladesh Bank official explained to The Financial Express. “Private sector credit demand remains muted as businesses adopt a wait-and-see approach ahead of the national polls.”
Financial analysts suggest that the ongoing liquidity glut may keep T-bill yields under downward pressure in the near term, particularly if the political climate continues to temper private sector borrowing. In addition, the Bank’s monetary operations, including repo and reverse repo transactions, are likely to influence short-term yield movements, with market participants closely monitoring policy signals ahead of the election period.
Market watchers also highlighted that the decline in long-term T-bill yields could signal expectations of stable inflation and lower risk premiums, offering a predictable investment avenue for risk-averse financial institutions.
The government’s reliance on T-bill issuance as a fiscal tool underscores the enduring role of treasury securities in managing budgetary shortfalls while providing a low-risk investment channel for banks navigating periods of elevated liquidity.