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Yields on Treasury bills (T-bills) declined across the board on Sunday, slipping below the 11 per cent threshold, as banks redirected their excess liquidity into government securities amid weakening demand for private sector credit.

According to the latest auction results from Bangladesh Bank, the cut-off yield on the 91-day T-bill dropped to 10.45%, down from 11.58% in the previous auction. Yields on the 182-day and 364-day tenors also fell, settling at 10.70% and 10.98%, respectively—compared to 11.55% and 11.25% earlier.

A senior Bangladesh Bank official told The Financial Express that the moderation in yields reflects banks’ growing preference for low-risk government instruments amid sluggish credit growth.

“With private sector credit expansion slowing, banks are increasingly parking surplus funds in risk-free government securities,” the official said.

Credit Growth Slows Further

Private sector credit growth fell to 7.17% year-on-year in May 2025, down from 7.50% in April, according to central bank data. The decline signals muted business activity and tighter lending conditions in the current macroeconomic environment.

The official added that the downward pressure on yields is likely to persist in the coming weeks as investor appetite remains skewed toward short-term sovereign debt instruments.

Government Raises Tk 60 Billion

In Sunday’s auction, the government raised Tk 60 billion through the sale of 91-day, 182-day, and 364-day T-bills. The proceeds will help finance the ongoing budget deficit, a key objective of short-term domestic borrowing.

Currently, four types of T-bills—14, 91, 182, and 364 days—are auctioned regularly by the Bangladesh Bank on behalf of the government to manage short-term fiscal needs.

In addition to T-bills, the government also issues five types of Treasury bonds with maturities of 2, 5, 10, 15, and 20 years, catering to long-term investors such as insurance companies, pension funds, and banks.