High Demand for Treasury Bills, NPR 18.3 Billion Up for Auction Today

With banks flush with liquidity in recent times, there has been intense competition to purchase treasury bills issued by the government to raise internal debt. Unable to expand loan portfolios, banks have turned to treasury bills, driving discount rates below 3 percent.

In this context, the Public Debt Management Office is set to renew NPR 18.3 billion worth of treasury bills through an auction today, Monday, March 17. According to the office, the auction includes NPR 5 billion for 91-day bills, NPR 4.3 billion for 182-day bills, and NPR 9 billion for 364-day bills. Bidding will take place online from 10 AM to 3 PM, with issuance scheduled for Tuesday.

Recent trends show applications for treasury bills exceeding demand by up to three times. On February 26, bids for a 28-day NPR 5 billion treasury bill reached NPR 18.63 billion, with an average discount rate of 2.98%. For a 91-day NPR 8.5 billion bill, bids totaled NPR 23.6325 billion at 2.96%, while a 364-day NPR 5 billion bill saw NPR 21 billion in bids at 3.03%.

With ample investable funds in banks and limited loan expansion in other sectors, investment in treasury bills has surged, leading to a decline in short-term interest rates.

What is a Treasury Bill?
A treasury bill is a short-term government debt instrument with a maturity of one year or less, issued in 28, 91, 182, and 364-day terms. It is sold through auctions, with the discount rate determined by the bidding process. Class A, B, and C banks, financial institutions, organized entities, and the general public can participate in the auction.