Dhaka, Bangladesh (BBN)- Yields on Treasury bills (T-bills) posted a mixed trend on Sunday, as banks channelled excess liquidity into short-term government securities rather than longer-tenure instruments, reflecting heightened caution ahead of the upcoming national election.
The cautious stance could put upward pressure on yields of long-term instruments, while increased demand for shorter tenures may temporarily ease liquidity pressures in the money market, according to market insiders.
The cut-off yield, generally known as the interest rate, on the 91-day T-bill fell to 9.69 per cent on the day from 9.91 per cent previously.
Conversely, the yield on the 182-day T-bill rose to 9.89 per cent from 9.79 per cent, while the yield on the 364-day T-bill inched up to 9.70 per cent from 9.68 per cent, according to the auction results released by the Bangladesh Bank (BB), the country’s central bank.
On the day, the government raised BDT 65 billion through the issuance of three types of T-bills to partly finance its budget deficit.
Actually, most banks are preferring to invest their excess liquidity in shorter-tenure instruments rather than longer-term ones, reflecting cautious portfolio positioning ahead of the national election, which is scheduled to be held in February 2026.
The preference for short-term placements is also seen as an indication that lenders are reluctant to lock in funds for longer periods, anticipating potential volatility in interest rates and funding conditions in the coming months, they added.
Earlier, on September 28, yields on T-bills had fallen below the central bank's policy rate as banks sought safe investment options for their surplus funds amid subdued private credit demand before the election.
At that time, the yield on the 91-day T-bill fell to 9.91 per cent from 10.00 per cent, while the yield on the 182-day T-bill dropped to 9.79 per cent from 9.91 per cent. The yield on the 364-day T-bill also declined to 9.68 per cent from 9.88 per cent.
Currently, the BB’s policy rate, also known as the repo rate, stands at 10 per cent.
Meanwhile, private sector credit growth remained sluggish, reaching 6.52 per cent in July 2025 on a year-on-year basis, compared to 6.49 per cent in June, reflecting weak business confidence and tighter lending conditions.
At present, four types of Treasury bills are auctioned to adjust the government's borrowing from the banking system. These have maturity periods of 14, 91, 182 and 364 days.
In addition, five government bonds, with maturities of two, five, 10, 15 and 20 years respectively, are also traded in the market.
BBN/SSR/AD