14-Day T-bill auctions resume after 18 months

The auction of 14-day Treasury Bills (T-bills) resumed on Wednesday after nearly one and a half years, aiming to partially address the government's budget deficit.

"The government prefers short-term rather than long-term borrowing from the banking system to manage its funds efficiently," a senior official of the Bangladesh Bank (BB) told The Financial Express, explaining the main objective behind the resumption of the T-bill auctions.

This move is expected to help ease the government's debt-servicing burden, the central banker added. The next auction of 14-day T-bills is scheduled for 16 July, with plans to raise Tk 50 billion under the same arrangement.

The cut-off yield, commonly known as the interest rate, on the 14-day T-bills rose to 12.00 per cent on the day, up from 10.15 per cent in the previous auction held on December 10, 2023.

The government borrowed Tk 50 billion on the day through the issuance of the short-term T-bills to help cover its fiscal shortfall.

The 14-day T-bills were initially introduced on 16 November 2016 to facilitate more efficient government cash management.

Market operators, however, have urged the government to utilise the 14-day T-bills on a regular basis, saying it would contribute to market development and open up a new avenue for short-term investments by commercial banks.

"The government normally uses short-term T-bills as and when required," said the head of treasury at a leading private commercial bank (PCB), adding that the auction of 14-day T-bills should continue.

Currently, four types of T-bills are transacted through auctions to adjust government borrowings from the banking system. These T-bills have maturities of 14 days, 91 days, 182 days, and 364 days.

T-bills are short-term investment instruments issued through auctions conducted by the central bank on behalf of the government.

In addition, five government bonds-tenured for two, five, 10, 15, and 20 years-are also traded on the market.

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