Three times more applications for treasury bills and development bonds

KATHMANDU, DECEMBER 9: The Public Debt Management Office (PDMO) has been receiving over three times the number of applications for its treasury bills and development bonds. The surge in applications is attributed to the high liquidity in banks and financial institutions, driving their interest in these instruments.

In the current fiscal year 2024/25, the PDMO has issued development bonds 11 times, totalling Rs 109 billion. However, the banks and financial institutions (BFIs) have submitted applications worth Rs 295 billion, according to PDMO data. The average interest rate for these bonds is set at 4.71%.

Prakash Pudasaini, Deputy Director of PDMO, noted a sharp increase in applications for development bonds and treasury bills. "Due to the excess liquidity in the banking system, we are receiving applications over three times the issuance," he explained.

To date, competitive bids for development bonds have amounted to Rs 317.46 billion, while non-competitive bids have totalled Rs 4.91 billion. Under the competitive category,  the BFIs compete on both the amount and interest rates. The leftover funds and fixed interest rates from the competitive category are offered to non-competitive bidders.

The bonds are divided into competitive (85%) and non-competitive (15%) categories. Competitive bidders have been allotted Rs 99.74 billion in bonds, while non-competitive bidders received Rs 4.91 billion worth of bonds.

Recent Development Bond Issuances

On November 28, the government issued Rs 1 billion in development bonds at a 3.7% interest rate, attracting Rs 32.67 billion in applications from 19 institutions, with a total of 66 bids. On November 12, Rs 1 billion was issued at a 4.18% interest rate for six years, receiving Rs 32.70 billion in applications from 19 institutions through 64 bids. On October 24, the government issued Rs 9 billion at a 4.34% interest rate for nine years, with applications amounting to Rs 28.75 billion from 18 institutions, across 69 bids. Earlier, on September 25, Rs 10 billion was issued at a 4.27% interest rate for six years, attracting Rs 26.50 billion in applications from 15 institutions through 41 bids.

Treasury Bills See Fivefold Applications

The PDMO has issued treasury bills 62 times since the start of the fiscal year, receiving applications over five times the issuance amount. These applications are distributed competitively.

On July 17, the government issued Rs 10 billion in renewable 28-day treasury bills, receiving applications totaling Rs 52.06 billion. On the same day, Rs 7.70 billion worth of 91-day treasury bills were issued, with applications amounting to Rs 53.81 billion. Later, on July 24, Rs 10.49 billion in renewable 91-day treasury bills were issued, attracting applications of Rs 91.40 billion. On December 1, the government issued Rs 5 billion in one-year treasury bills, receiving Rs 25.34 billion in applications from 16 institutions, spread across 28 bids. These issuances are part of the government’s broader strategy to manage its debt through various financial instruments.

Government Debt Instruments

Each year, the government collects public debt through external and internal loans. External loans are borrowed from multilateral and bilateral sources, while internal loans are raised through various financial instruments. Treasury bills, which are short-term loans with a duration of up to one year, are issued as part of internal loans.

Development bonds, a long-term financial instrument, are specifically open to banks and financial institutions. Citizen savings bonds are available to Nepali citizens and non-resident Nepalis, whereas foreign employment savings bonds are targeted at Nepali migrant workers, with terms ranging from 5 to 12 years. 

Issuance schedules for treasury bills and development bonds are fixed, with the PDMO releasing a calendar by mid-July each fiscal year. Bonds are issued within a day, with interested institutions submitting applications online. The allocation is completed between 10 AM and 2 PM the following day.