Yields on T-bills down as banks' liquidity inflows up

The yields on Treasury bills (T-bills) declined on Thursday as banks showed a willingness to invest their excess liquidity in the risk-free instruments.

The cut off yield, generally known as interest rate, on the 91-Day T-bills came down to 11.97 per cent on the day from 12.09 per cent earlier while the yield on 364-Day T-bills fell to 11.74 per cent from 12.03 per cent.

However, the yield on 182-Day T-bills also came down to 11.96 on the day from 12.00 per cent of the previous level, according to the auction results.

"Most banks prefer to invest their excess funds in the government securities as liquidity inflows increase in the market," a senior official of the Bangladesh Bank (BB) told The Financial Express (FE) while explaining the latest market situation.

The central banker also predicted that the existing trend of yields on T-bills may continue in the coming weeks.

Meanwhile, the government borrowed Tk 60 billion on the day through issuing three-type of T-bills to meet its budget deficit partly.

Currently, four T-bills are transacted through auction to adjust government borrowings from the banking system. The T-bills have 14-day, 91-day, 182-day and 364-day maturity periods.

The bills are short-term investment tools issued through auction, conducted by the central bank on behalf of the government.

Furthermore, five government bonds, with tenures of two, five, 10, 15 and 20 years respectively, are traded on the market.

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