Dhaka, Bangladesh (BBN) - No bids of treasury bills (T-bills) was accepted on Sunday as the primary dealers (PDs) quoted higher yield to minimize their cost of fund, treasury officials said.
“The auction committee did not accept any bids for the T-bills on the day due mainly to higher yield, quoted by the PDs,” a senior official of the Bangladesh Bank (BB) told BBN, adding that the PDs offered their bids with hiked 100 basis points from the previous auction for the T-bills.
Thirteen bids amounting to BDT 2.94 billion were offered for 182-day T-bills against pre-targeted amount of BDT 3.0 billion on Sunday, according to the auction result, issued by the central bank.
“But those bids were no accepted,” the auction result added.
The PDs offered the yield, generally known as interest rate, on 182-day T-bill ranging between 8.74 percent and 8.65 percent on the day from 7.64-7.65 per cent of the previous auction, held on August 25 last, according to the central bank statistics.
The PDs justified their higher offering yield for the T-bills, saying that they have quoted the yield for the government approved security in line with the BB’s latest signal on policy interest rates.
The central bank has increased its policy interest rates by fifty basis points after more than two months to curb inflationary pressures on the economy.
The interest rate on repurchase agreement (repo) was re-fixed at 7.25 per cent on September 4 last from 6.75 per cent while the reverse repo rate was increased to 5.25 per cent from 4.75 per cent.
“We’ve hiked yield on the T-bills 100 basis point to minimize our cost of funds,” a senior member of the Primary Dealers Bangladesh Limited (PDBL) told BBN, adding that said most of the PDs are now facing serious problem due to inadequate liquidity support by the central bank.
The central bank of Bangladesh earlier selected 15 PDs - 12 commercial banks and three non-banking financial institutions (NBFIs) - to deal in government securities in the secondary market.
Currently, three T-bills are being transacted through auctions to adjust the government borrowings from the banking system. The T-bills have 91-day, 182-day and 364-day maturity periods.
On the other hand, four government bonds - 5-year, 10-year, 15-year and 20-year - are being traded in the markets.
BBN/SSR/AD-11Sept11-9:22 pm (BST)
