Written by The Banking Post
Yields on treasury bills dropped below 10 per cent on Sunday as banks parked their surplus funds in government securities, reflecting weak private sector credit demand and lower borrowing needs from the state.
According to auction results, the cut-off yield on 182-day T-bills fell to 9.91 per cent from 10.03 per cent, while the rate on 364-day T-bills declined to 9.88 per cent from 10.01 per cent. The 91-day T-bill yield eased slightly to 10 per cent from 10.03 per cent, aligning with the current policy (repo) rate of 10 per cent.
Earlier, on September 16, the yield on 10-year Bangladesh Government Treasury Bonds also dipped below the policy rate, sliding to 9.89 per cent from 10.26 per cent.
“Most banks are investing excess funds in risk-free government securities, as private sector credit demand remains sluggish ahead of the election,” said a senior Bangladesh Bank official.
Private sector credit growth stood at 6.52 per cent year-on-year in July, almost unchanged from 6.49 per cent a month earlier, reflecting weak business confidence and tighter lending conditions.
The government, meanwhile, borrowed Tk 65 billion through issuing three categories of T-bills to partly finance its budget deficit.
Currently, four types of T-bills — 14-day, 91-day, 182-day, and 364-day — are traded through auctions, along with five government bonds with maturities ranging from two to 20 years.
