Written by The Banking Post
Treasury bill yields showed a mixed trend on Sunday as banks grew cautious and shifted excess liquidity to shorter-tenure securities amid uncertainty ahead of the national election.
Auction results showed the cut-off yield on the 91-day T-bills edged down slightly to 10.11 per cent from 10.14 per cent at the previous auction, indicating softer demand for very short-term rates.
In contrast, yields on longer-dated bills moved higher. The cut-off yield on the 182-day T-bills rose to 10.45 per cent from 10.25 per cent, while the yield on the 364-day T-bills increased to 10.39 per cent from 10.34 per cent.
The government raised Tk 80 billion by issuing the three categories of T-bills to partly finance its budget deficit.
“Most banks are reluctant to park their excess funds in longer-term T-bills to manage liquidity more efficiently ahead of the upcoming national election,” said a senior treasury official at a leading private commercial bank.
He said banks are preferring short-term instruments to avoid potential interest rate volatility in the pre-election period and expects the current yield pattern in government securities to persist in the coming weeks.
At present, the government issues four types of T-bills—14-day, 91-day, 182-day and 364-day—through auctions to meet short-term borrowing needs. In addition, five government bonds with maturities of two, five, 10, 15 and 20 years are actively traded in the market.
