T-bill yields climb after new PD guidelines

The yields on treasury bills (T-bills) rose on Sunday following the implementation of new primary dealer (PD) guidelines aimed at injecting greater dynamism into both the primary and secondary markets.

The cut-off yield, generally regarded as the interest rate, on the 91-day T-bills increased to 10.40 per cent from 10.05 per cent, while the yield on the 182-day T-bills rose to 10.34 per cent from 10.23 per cent previously.

The yield on the 364-day T-bills also edged up to 10.49 per cent from 10.34 per cent earlier, according to the auction results.

On the day, the government raised Tk 75 billion by issuing three types of T-bills to partially finance its budget deficit.

"Under the new PD guidelines, only PD banks are allowed to participate in auctions by submitting bids, which has helped push up T-bill yields," a senior Bangladesh Bank (BB) official told The Financial Express, explaining the latest market developments.

The central bank earlier selected 24 primary dealers to facilitate trading of government-approved securities in the secondary market.

Currently, four types of T-bills are issued through auctions to manage government borrowing from the banking system. These instruments have maturities of 14 days, 91 days, 182 days and 364 days.

In addition, five government bonds, with tenures of two, five, 10, 15 and 20 years, are actively traded in the market.

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