Nepal Government Auctions NPR 17 Billion Treasury Bills Amid Surplus Bank Liquidity

The Government of Nepal is set to raise NPR 17 billion through a treasury bill auction today, Monday (Jestha 12). According to the Public Debt Management Office, NPR 12 billion of the total amount will be used to renew maturing bills, while NPR 5 billion will be raised through the issuance of new 364-day treasury bills.

The auction will be conducted online from 10:00 AM to 3:00 PM, and the bills will be issued on Tuesday.

Due to surplus liquidity in the banking system, treasury bills have been receiving significantly higher bids than the offered amounts, which has driven down the discount rates.

For instance, in the previous auction held on Jestha 2 (May 15), a 28-day bill worth NPR 10 billion received bids totaling NPR 28.86 billion, resulting in an average discount rate of 2.94%. Similarly, a 182-day bill worth NPR 5 billion received bids worth NPR 27.29 billion (2.97% discount rate), and a 364-day bill worth NPR 7.5 billion saw bids totaling NPR 23.85 billion (2.99% discount rate).

With banks holding ample investable funds and limited avenues for credit expansion, many are turning to government securities to generate returns. This heightened demand has put downward pressure on short-term interest rates.

Taking advantage of the low interest rate environment, the government has accelerated its internal borrowing efforts to meet its financing needs.