The yield on nine-month treasury bills issued by Bosnia's entity Federation of BiH turned negative on Tuesday as banks snapped up the paper as a cheaper alternative to keeping money at the central bank.
The region hit its target of 30 million Bosnian marka (15 million Euros) to help plug a budget gap, with the average yield falling to -0.0167 percent from 0.26 percent at the previous sale of the nine-month paper last December.
Investors, mostly banks, placed bids of 103.5 million marka, data from the regional Finance Ministry showed.
Bosnia's central bank introduced a fee in April for banks’ surplus reserves equal to the European Central Bank's 50 percent interest rate on commercial bank deposits, which is aimed at boosting lending.
The move has prompted banks to instead purchase government debt as it is less costly than keeping their surplus reserves with the central bank, a Finance Ministry official told Reuters.
