Dhaka, Bangladesh (BBN) - The yield on 10-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 cut off yield, generally known as interest rate, on the Bangladesh Government Treasury Bonds (BGTBs) rose to 12.05 per cent in the immediate past auction from 10.32 per cent earlier.
Most of the banks are maintaining a cautious approach in investing their excess funds in long-term securities, considering the future liquidity situation in the market, according to market insiders.
The interest rates on the government-approved securities are not factored at this moment, they said, adding that factor is the future liquidity situation in the market.
Meanwhile, liquidity support from the central bank has already been squeezed following phasing out the 28-day tenure repo facility from April 10 this calendar year, they explained.
The Bangladesh Bank (BB), the country’s central bank, phased out its 28-day repo facility on April 10 to reduce banks' reliance on central bank liquidity support and encourage them to manage their own liquidity independently.
The government is set to borrow BDT 35 billion through issuing the BGTBs on Tuesday to partially meet its budget deficit.
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