Dhaka, Bangladesh (BBN) - Yields on Treasury bills (T-bills) dipped below the 11 per cent mark on Sunday, as banks turned to risk-free government securities to park their surplus liquidity amid waning credit demand from the private sector.
According to the latest auction results, the cut-off yield -- commonly referred to as the interest rate -- on the 91-day T-bill dropped to 10.45 per cent from 11.58 per cent previously.
Yields on the 182-day and 364-day T-bills also declined, settling at 10.70 per cent and 10.98 per cent respectively, compared to 11.55 per cent and 11.25 per cent at the prior auction.
“Lower private sector credit growth has pushed up banks to channel their excess funds into government-approved securities,” a senior treasury official at a leading private commercial bank said while explaining the current dynamics in the T-bill market.
Private sector credit growth slowed to 7.17 per cent year-on-year in May 2025, down from 7.50 per cent in April, reflecting subdued business sentiment and tighter lending conditions, according to central bank data.
The treasury official also predicted that this trend of falling yields may persist over the coming weeks, as the market continues to favour short-term sovereign debt instruments.
On Sunday, the government borrowed BDT 60 billion through the issuance of three types of T-bills to help cover part of its ongoing budget deficit.
At present, four types of T-bills -- with maturities of 14, 91, 182, and 364 days -- are auctioned to manage short-term government borrowing needs. The auctions are conducted by the Bangladesh Bank on behalf of the government.
In addition to T-bills, five types of government bonds with tenures of 2, 5, 10, 15, and 20 years are also traded in the market, catering to longer-term investment strategies.
BBN/SSR/AD