Government to Raise NPR 15 Billion in Internal Debt Through Treasury Bills

The Government of Nepal is preparing to raise NPR 15 billion in internal debt through treasury bills on Magh 19. According to the Public Debt Management Office, NPR 5 billion will be raised through the issuance of new treasury bills, while NPR 10 billion will be collected by renewing existing bills.

Under the plan, treasury bills worth NPR 5 billion with a 91-day maturity and NPR 5 billion with a 364-day maturity will be renewed, while an additional NPR 5 billion treasury bill with a 364-day tenure will be newly issued. The bidding process will take place online from 10:00 a.m. to 2:00 p.m. on Monday, and the bills will be issued on Tuesday.

In recent weeks, treasury bill auctions have seen strong demand due to excess liquidity in the banking system. As a result, applications in recent auctions have exceeded the offered amount by three to six times. High demand has also pushed discount rates downward, as banks face limited alternative investment opportunities and prefer treasury bills as a safe short-term investment option.

In the auction held on Magh 12, applications worth NPR 25.88 billion were submitted for NPR 10 billion worth of 182-day treasury bills, with the average discount rate recorded at 2.39 percent. Similarly, bids totaling NPR 22.05 billion were received for NPR 11 billion worth of 364-day treasury bills, where the average discount rate stood at 2.62 percent.

Treasury bills are short-term government debt instruments with maturities of up to one year. In Nepal, treasury bills with tenures of 28, 91, 182, and 364 days are issued through auctions using a multi-price (American) system, where investors earn returns through discount rates instead of fixed interest.

Commercial banks, financial institutions, non-bank financial entities, organized institutions, and the general public approved by Nepal Rastra Bank are eligible to participate in treasury bill auctions. At least 15 percent of the auctioned amount is reserved for non-competitive bidders. Competitive and non-competitive bids cannot be submitted simultaneously by the same participant.

The continued high demand for treasury bills reflects ample liquidity in the banking system and indicates limited short-term investment alternatives in the broader financial market.