Written by The Banking Post
Yields on treasury bills (T-bills) dropped sharply on Sunday as banks moved to invest surplus liquidity in risk-free government instruments, amid continued weakness in private sector credit demand.
According to the latest auction results, the cut-off yield on 91-day T-bills declined to 11.58 percent from 11.97 percent. The yield on 182-day T-bills fell to 11.25 percent from 11.96 percent, while the 364-day T-bill rate dropped to 11.25 percent from 11.74 percent.
“The drop in yields reflects lower government borrowing requirements in the first month of the current fiscal year (FY2025–26),” a senior official of Bangladesh Bank told The Financial Express. He noted that banks are increasingly channeling excess funds into government securities as credit demand from the private sector remains sluggish.
Private sector credit growth dipped to 7.17 percent year-on-year in May 2025, down from 7.50 percent in April—signaling weakening business sentiment and cautious lending.
The central bank official also hinted that the downward pressure on T-bill yields may persist over the coming weeks if liquidity conditions and demand for private credit do not improve.
On Sunday, the government raised Tk 60 billion through the issuance of three categories of T-bills to help finance its budget deficit. The central bank auctions four types of treasury bills—14-day, 91-day, 182-day, and 364-day—on behalf of the government to meet short-term financing needs.
Alongside T-bills, the government also issues five types of bonds with longer tenures—two, five, 10, 15, and 20 years—which are actively traded in the secondary market.
