T-bill yields rise further as banks hold back ahead of June closing

The upward trend in yields on treasury bills (T-bills) continued on Sunday as banks showed reluctance to invest their excess liquidity in the risk-free securities.

The cut-off yield-generally referred to as the interest rate-on the 91-day T-bills rose to 12.10 per cent from 12.02 per cent in the previous auction, while the yield on the 364-day T-bills climbed to 12.24 per cent from 12.00 per cent.

However, the yield on the 182-day T-bills remained unchanged at 12.11 per cent, according to the auction results.

"Most banks have shown reluctance to invest their excess funds in government-approved securities ahead of the upcoming June closing," a senior official of the Bangladesh Bank (BB) told The Financial Express, explaining the latest market dynamics.

He also noted that banks are looking to manage their portfolios more efficiently as the fiscal year ends.

Despite the subdued demand, the government borrowed over Tk 7.68 billion-well below the pre-auction target of Tk 80 billion-by issuing three types of T-bills to partly meet its budget deficit.

Currently, four types of T-bills are auctioned to adjust government borrowings from the banking system. These T-bills have tenures of 14, 91, 182, 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 to T-bills, five types of government bonds with tenures of two, five, 10, 15, and 20 years are also traded in the market.

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