Dhaka, Bangladesh (BBN) - The yield on Five-Year BGTBs is likely to rise significantly today as the banks may express their unwillingness to invest excess funds in the long-term securities.
The government is set to borrow BDT 35 billion through issuing the BGTBs on Tuesday to partially meet its budget deficit.
The cut off yield, generally known as interest rate, on the BGTBs rose to 12.48 per cent in the immediate past auction from 10.47 per cent earlier, according to the auction results.
Most banks have been reluctant to invest their excess funds in the government-approved securities due to the ongoing liquidity pressure in the market, according to market insiders.
The banks are currently watching the impact of the phasing out of the 28-day repo facility on the market, they added.
The Bangladesh Bank phased out its 28-day repo facility from April 10, aiming to reduce banks' reliance on central bank liquidity support and encourage them to manage their liquidity independently.
Currently, five government treasury bonds, with tenures of two, five, 10, 15 and 20 years respectively, are traded on the market.
Besides, four treasury bills (T-bills) are transacted through auction to adjust government borrowings from the banking system. The T-bills have 14-day, 91-day, 182-day and 364-day maturity periods.
BBN/SSR/AD