91-day T-bill yield jumps to 10.24pc

The yields on treasury bills (T-bills), particularly the short-term ones, rose sharply on Sunday as banks appeared reluctant to invest their excess liquidity in risk-free government securities ahead of the year-end closing.

The cut-off yield, generally referred to as the interest rate, on the 91-day T-bills climbed to 10.24 per cent from the previous 9.53 per cent, while that on the 182-day instrument inched up to 9.99 per cent from 9.98 per cent.

But the yield on the 364-day T-bills remained unchanged at 9.99 per cent, according to the auction results.

The government borrowed Tk 75 billion on Sunday by issuing three types of T-bills to meet its budget deficit partly.

"Most banks are reluctant to park their excess funds in short-term T-bills, particularly the 91-day ones, ahead of the year-end closing on December 31," a senior official of the Bangladesh Bank told The Financial Express.

He also said the government borrowed Tk 35 billion out of the targeted Tk 75 billion by issuing 91-day T-bills.

Banks now prefer long-term T-bills to avert the possible decrease in the interest rate in the coming months, according to a senior treasury official at a leading private commercial bank.

The banker also predicted the existing trend of yields on government securities may continue in the coming weeks.

Currently, four T-bills are transacted through auctions to adjust government borrowings from the banking system.

The bills have 14-day, 91-day, 182-day, and 364-day maturity periods.

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

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