T-bills witness sharp rise in yields ahead of Eid-ul-Azha

The yields on treasury bills (T-bills) increased significantly on Sunday as banks expressed unwillingness to invest their excess liquidity in the securities ahead of the upcoming Eid-ul-Azha.

The cut-off yield, generally known as interest rate, on the 91-day T-bills rose to 12.02 per cent from 11.69 per cent of the previous level while the yield on 182-day T-bills rose to 12.11 per cent from 11.85 per cent.

However, the yield on 364-day T-bills reached 12.00 per cent on the day from 11.75 per cent earlier, according to the auction results.

"Most banks have shown reluctance to invest their excess funds in the government-approved risk-free securities ahead of the Eid," a senior official of the Bangladesh Bank (BB) told The Financial Express (FE).

He also said the banks want to manage their funds efficiently ahead of the holy occasion.

However, the government borrowed Tk 80 billion on the day through issuing three types of T-bills to partly meet its budget deficit.

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.

siddique.islam@gmail.com