Dhaka, Bangladesh (BBN) - The yields on 10-Year BGTBs and 20-Year BGTBs are likely to rise significantly today as banks may express unwillingness to invest their liquidity in the long-term securities.
The cut off yield, generally known as interest rate, on the 10-Year BGTBs came down to 11.88 per cent in the immediate past auction from 12.48 per cent earlier while the yield on the 20-Year BGTBs stood at 12.24 per cent from 12.46 per cent, according to the auction results.
The government is set to borrow BDT 50 billion through issuing the BGTBs on Tuesday to partially meet its budget deficit.
Most of banks are maintaining a cautious approach in investing their excess funds in the long-term securities, considering the future liquidity situation in the market, according to market operators.
Actually, higher demand for funds by the government ahead of the end of the outgoing fiscal year (FY), 2024-25, is pushing up the yields on its securities, they explained.
The government has already exceeded the limits for ways-and-means advances (WMAs) and overdraft (OD) drawing facilities from the central bank.
Currently, five government bonds, with tenures of two, five, 10, 15 and 20 years respectively, are traded on the market.
On the other hand, four 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